Nestlé Q3 PAT Up by 8% to RM149 Million

KEY HIGHLIGHTS

• Profit After Tax for the third quarter grew by 8.2% year-on-year to RM149 million.
• Positive domestic growth driven by strong sales execution, successful product innovations and marketing activities.
• Second interim dividend of RM0.70 per share declared.

Nestlé (Malaysia) Berhad recorded strong margins in its third quarter ended 30 September 2019, reflecting strong domestic sales as well as successful efforts to drive efficiencies and savings against a backdrop of unfavourable commodity costs and exchange rates.

Review of performance: Quarter 3, 2019 vs Quarter 3, 2018

Nestlé Malaysia recorded strong profit margins for its third quarter, delivering Profit After Tax of RM149 million and Profit Before Tax of RM192 million, an increase of 8.2% and 2.6% respectively, versus the same period in 2018.

Mr Juan Aranols, Chief Executive Officer of Nestlé Malaysia Berhad said, “The strong growth in profit margins was driven by robust domestic sales and our steady focus on driving efficiencies and savings to build bottom line resiliency in the face of external cost pressures.”

Domestic sales growth remained robust at 1.7% after adjustment for the divestment of the chilled dairy business, comparing favourably against the exceptionally strong sales in Q3 2018, during the 0% GST period. Total Turnover for the quarter registered a slight decrease of -2.2% at RM1.4 billion for the quarter, reflecting a challenging year for exports, against a backdrop of global uncertainties.

“Growth in our domestic sales was driven by strong sales execution, the continuing success of product innovations and strong marketing support. New innovations launched during the quarter under review continue to resonate well with our consumers, enabling the Group to further reinforce our leading market share in many key categories,” said Mr Aranols.

Product launches in the third quarter included the STARBUCKS AT HOME range, the relaunch of NESCAFÉ GOLD Mixes, MILO Protein Up, new NESCAFÉ Ready-To-Drink variants, NESTLÉ Crunch Wafer Nuts and DRUMSTICK Pika Pika Ice Cream, to name a few.

Review of performance (Year-to-date, 2019 vs Year-to-date, 2018)

Despite subdued consumer sentiment, domestic sales remained an engine for growth during the nine month period ending 30 September 2019 with an increase of 2.6%, a robust 4.6% when excluding the impact of the Chilled Dairy divestment. Total Turnover grew 0.4% to RM4.9 billion, or 2.1% net of the Chilled Dairy business.

Mr Aranols added, “The improved performance in the first nine months of 2019 was driven by sustained consumer demand and positive offtake for our brands. This was achieved on the back of robust demand and effective marketing support over the Chinese New Year and Hari Raya festive seasons, as well as successful product innovations and portfolio renovation.”

On the back of the Group’s solid Turnover, both Profit Before Tax and Profit After Tax for the nine-month period increased by 1.1% to RM704 million and RM541 million respectively. This was supported through good domestic growth and by proactively capturing efficiencies and savings to invest behind brands.

As a result of the Group’s performance and in line with our commitment to sustainable creation of shareholder value, the Board declared a second interim dividend of RM0.70 per share for the financial year ending 31 December 2019.

Prospects

Mr Aranols further commented that, “Building on our strong foundation, the Group’s results remain resilient and we expect to deliver solid results for the year. Global and local uncertainties (both consumer and commodities) may continue, but our fundamentals remain strong and we continue to focus on meeting current and future needs, as well as the expectations of Malaysian consumers, to maintain our growth momentum and deliver value to all stakeholders.”

“Moving forward, we will continue to proactively enhance efficiencies and generate savings to invest behind our brands and protect our margins. This remains our most effective strategy to counter rising commodity costs and protect the accessibility to our brands by consumers,” he added.

“In addition to the solid financial performance, I am particularly proud of our progress in the war on plastic waste and our multiple initiatives in support of Malaysian farmers, including our recent decision to revive the coffee farming programme in Kedah,” concluded Mr Aranols.

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

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