KEY HIGHLIGHTS
- Turnover up by 2% to RM1.34 billion in the second quarter and 3.4% when adjusted for divestment of Chilled Dairy business.
- Robust domestic growth at 4.5% driven by innovation, strong festive sales and sustained consumer demand.
- Solid Profit After Tax at RM 156.9 million, even if slightly diluted vs Quarter 2, 2018, due to phasing of marketing investment, and some unfavourable impact from exchange rates and commodity prices, both mitigated by effective hedging strategy.
- Net interim dividend of RM0.70 per share declared.
Nestlé (Malaysia) Berhad maintained for its second quarter ended 30 June 2019 solid top line results while weathering some cost and currency headwinds. The results were driven by sustained consumer demand, supported through strong innovations and marketing investments that also resulted in improved market shares.
Review of performance: Quarter 2, 2019 vs Quarter 2, 2018
Nestlé Malaysia continued to deliver positive growth momentum in the second quarter, driven by strong domestic growth of 4.5% which translated into a higher Turnover of RM1.34 billion, 2% higher than Quarter 2, 2018. This reflected a growth increase of 3.4%, factoring in divestment of the Chilled Dairy business as of 1 January 2019. Domestic growth cushioned exports, which remained slightly below expectations, reflecting uncertain and volatile conditions in international markets.
The Group recorded a Profit After Tax of RM156.9 million for its second quarter. This represents a slight dilution in comparison to Quarter 2, 2018 due to a planned increase in marketing investment, as well as some unfavourable net impact from exchange rates and commodity prices.
Mr Juan Aranols, Chief Executive Officer of Nestlé Malaysia Berhad said, “Our growth momentum acceleration in Quarter 2 demonstrates the strength of our domestic business and the strong sustained demand for our brands, driven by focused sales execution, attractive innovations, increased marketing support and efforts to capture opportunities during the festive season”.
The Group maintained its innovation focus with new products launched in Q2, such as its new propositions for NESCAFÉ GOLD, MAGGI Pedas Giler Seafood, MAGGI Pedas Giler 2X Ayam Bakar and LA CREMERIA Summer Berries Yogurt.
Regarding the slight dilution of margins during the quarter as compared to Quarter 2, 2018, Mr Aranols mentioned, “The quarterly profitability, whilst remaining strong, has been impacted by the phasing of our marketing spending as well as some one-off warehousing expenses in preparation for the factory expansion in Chembong. This comes on top of higher cost of commodities mitigated by robust hedging strategies in place.”
The Group recorded Operating Profit and Profit Before Tax of RM208 million and RM199 million respectively for the quarter under review.
Review of performance: Year-to-date 2019 vs Year-to-date 2018
For its first half ended June 30, 2019, the Group’s Turnover increased to RM2.79 billion, 1.8% higher when compared to the first half of 2018 (3.5% when adjusted for the Chilled Dairy divestment). Growth is driven by strong domestic sales growing at 6.1%.
Successful product innovations and portfolio enhancements have continued to drive domestic growth momentum in the first half of 2019. These include launches introduced in Q1 such as NESCAFÉ Blend & Brew White Coffee, NESTUM Brown Rice, and NESCAFÉ Tarik Kurang Manis.
The Group recorded a slight increase in Operating Profit of RM529 million and in Profit Before Tax of RM512 million. Profit After Tax came in at RM392 million, marginally below the corresponding period in 2018, arising from the expiration of the investment incentive.
Reflecting the Group’s commitment to sustained shareholder value creation, the Board declared an interim dividend of RM 0.70 per share for the financial year ending 31 December 2019. This is the same value of the interim dividend paid in 2018.
Prospects
Mr Aranols indicated, “We remain confident in our full year performance against a backdrop of global uncertainties and volatility. Our fundamentals remain solid and we continue to work hard to maintain the strong endorsement of our brands by the Malaysian consumers. Amongst many other elements, our plans for the second half of the year include an exciting stream of new product launches in the market, including our most recent launch, the introduction of the STARBUCKS At Home range, building on Nestlé’s Global Coffee Alliance with STARBUCKS”.
“We will continue to proactively capture efficiencies and savings to invest behind our brands and protect our margins as the best way to counter rising commodity costs and protect the accessibility to our brands by consumers,” he concluded.
About Nestlé Malaysia
Nestlé is the world’s largest food and beverage manufacturer. Headquartered in Switzerland, Nestlé is present in 189 countries around the world, and our 328,000 employees are committed to Nestlé’s purpose of enhancing quality of life and contributing to a healthier future. Our performance is driven by our Nutrition, Health and Wellness strategy. Since 1912, we have been nourishing Malaysians through our quality brands and products, whilst maintaining our Halal excellence and integrity. This is in line with our promise of delivering GOOD FOOD, GOOD LIFE to all. To learn more about how we have been nourishing Malaysians for over a century, do visit www.nestle.com.my or our Facebook page at http://www.facebook.com/NestleMalaysia
For more information, please contact:
Maxine Lim
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6650
Email: [email protected]
Kanjana Ilango or Alya Nurina
acorn communications
Tel: (+603) 7958 8348
Email: [email protected]
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