Strong in-home consumption continued while Out-of-Home channels recovered progressively
- Solid turnover of RM1.4 billion for Q3 FY2020 bouncing back almost to Q3 2019 levels.
- In-home consumption remained strong in the quarter and exports growth was positive, while Out-of-Home (OOH) channels improved significantly vs previous quarter as Malaysia moved into the Recovery Movement Control Order (RMCO). However, the activity in this channel remains well below the 2019 baseline.
- Profit After Tax at RM128 million was resilient and closer to the level of Q3 2019 as OOH channels performance improved and with a lower level of COVID-19 related expenses vs. Q2/H1.
- Second interim dividend of RM0.70 per share declared, while capital investment plans continue to be executed as per plan.
- Facility for Plant-Based Meal Solutions on track to completion.
Petaling Jaya, November 10, 2020 - Nestlé (Malaysia) Berhad results for the third quarter ended 30 September 2020 reflect resilient in-home consumption for most Nestlé brands, as well as a progressive recovery of OOH channels after the disruptive impact of MCO in Q2/H1.
Review of performance: Quarter 3, 2020 vs Quarter 3, 2019
Turnover for the quarter was RM1.4 billion, almost on par with strong Q3 2019 sales. The Group’s core food and beverage (F&B) business was also a key contributor, recording a 2.2% growth driven by strong in-home consumption, and a positive recovery of exports. OOH channels remained below the previous year baseline, but gained momentum progressively following the easing of operational constraints under the RMCO starting mid-June.
Mr Juan Aranols, Chief Executive Officer of Nestlé Malaysia Berhad said, “Throughout the RMCO period, our brands continued to gain strong endorsement from Malaysians. I want to give special credit to our teams working with the OOH channels, and the efforts they have deployed to support our customers to restart their activity and reignite business after confronting great challenges during H1. Our close engagement and partnership with the Out of Home operators have been instrumental to see a progressive recovery of the activity in these channels”.
“Our business has been resilient but not immune to the significant impact of the COVID19 pandemic. The results for the quarter reflect strong demand generation activities throughout the quarter. This has helped to keep a robust in-home consumption for all our main brands. We have kept very close to Malaysians with strong communication campaigns, effective digital engagement and continued strong in-store execution. One of the highlights of this strong engagement was represented by the Peraduan Gaji Semur Hidup (Nestlé Salary For Life Contest) TV grand finale in August. It became one of the most watched game-shows of the year and allowed us also to bring joy to all the winners as well as the 17 charities endorsed by each one of them. The 70th Milo anniversary celebrations and our MAGGI Sah Malaysia (MAGGI Confirm Malaysia) campaign were also great examples on how we keep our brands relevant and close to all Malaysians. Last but not least, we also embarked on a program aimed at supporting local coffee shops and small restaurants impacted by COVID-19 (Bangkit Bersama Nestlé / Rise with Nestlé)”.
Innovation remained a strong growth driver through the quarter, as the company rolledout a number of important new products, such as MILO Activ-Go Plus Fibre, an important addition to the MILO range catering to the needs of a more adult audience, with increased fibre content and even lower sugar. The Company also introduced a number of new products under NESCAFÉ (NESCAFÉ Latte Milk Tea, NESCAFÉ Iced Capuccino), NESTLÉ ICE CREAM (Musang King, LA CREMERIA Peanut Butter), MAGGI (MAGGI FUSIAN Bowl range) and NESTUM (Purple Sweet Potato and Taro), amongst others.
Despite tough external conditions, the Group registered a Profit Before Tax of RM171 million and a Profit After Tax of RM128.4 million for Q3 2020. This was slightly lower compared to the same period last year (PAT RM149.0 million in Q3 2019), primarily due to the impacted OOH channels, as well as higher operational expenses still necessary to ensure segregation at the work place and preserve safety and operational continuity throughout the COVID-19 pandemic.
The Group also announced a second interim dividend of RM0.70 per share, in line with prior year, reconfirming its willingness and confidence to deliver a solid dividend for the Full Year.
Review of performance (Year-to-date, 2020 vs Year-to-date, 2019)
For the first nine months ended 30 September 2020, the Group’s turnover stood at RM4.04 billion, slightly lower than last year (RM4.19 billion). Besides the anticipated impact of the earlier timing of Chinese New Year on Q1 sales compared with the previous year, sales for the first nine months of 2020 were affected by the hard-hit OOH channels during the MCO particularly in the first half of the year, which impacted specially the NESTLÉ PROFESSIONAL business.
Nevertheless, the impact was mitigated by the Group’s core F&B business which registered an increase of 1.1% in sales for the nine-month period, supported by solid sales execution and successful marketing campaigns, such as Peraduan Nestlé Gaji Seumur Hidup, the MILO 70 Tahun Kebaikan Dalam 70 Hari (MILO 70 Years of Goodness in 70 days) contest and the MAGGI Sah Malaysia campaign.
Mr Aranols added, “Throughout the pandemic, we have maintained our focus to continue supplying essential foods and beverages to Malaysians, whilst safeguarding our people and supporting Malaysians during this challenging time. This has enabled us to continue delivering resilient sales and earnings amidst the challenging conditions brought about by COVID-19. Our significant contributions in multiple ways to provide relief to those most impacted by the pandemic, as well as to front liners, also reflect our commitment to support the community”.
The Group recorded resilient profit margins for the first nine months, with a Profit Before Tax of RM557.4 million and Profit After Tax of RM420.2 million. The contraction against the same period of 2019 (PAT RM541.1 million) was due to the impact of COVID-19 on OOH channels and was mostly concentrated in Q2, due to the significant expenses of RM50 million needed to preserve work safety and operational continuity and the one-off gain of RM19.8 million that had been recorded in 2019 related to the Petaling Jaya factory divestment.
Mr Aranols further commented, “While external challenges are expected to persist in the near-term, we firmly believe longer term prospects are positive and we will continue to work hard to win the confidence and trust of Malaysians every day, providing them with nutritious and tasty products that help them to achieve a healthy and active lifestyle. We remain committed also to continue driving shareholder value, and our decision to declare a second interim dividend of RM0.70 per share reflects our confidence in delivering another year of resilient results. We will proceed with our investment plans as previously announced.
“With the recent rise in COVID-19 cases and the re-enforcement of the Conditional MCO, we will continue to ensure the safety of our people and business partners, and play our part to support communities. Our strong innovation pipeline across categories will further support our performance in the fourth quarter, and we remain focused on driving excellence in operations and commercial execution to accelerate growth.”
“Sustainability remains a top priority for us, now even more than before. We continue to make good progress on our sustainability commitments, with the launch of Project RELeaf to plant 3 million trees by 2023, the most ambitious reforestation initiative in Malaysia and across the Nestlé world, the delivery of our commitment to eliminate plastic straws from all our products before year end, and many other initiatives to reduce plastic waste and continue improving our environmental impact.”
“We are confident that with all the elements we have in place, we will again generate solid results and shareholder returns, as we balance our growth drive with a prudent approach to manage potential downside risks in this current uncertain landscape,” 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 present in Malaysia. Since 1912, we have been nourishing Malaysians for over a century 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, please visit www.nestle.com.my or our Facebook page at http://www.facebook.com/NestleMalaysia
For more information, please contact:
Nestlé (Malaysia) Berhad
Tel: (+603) 7965 6650
E-mail: [email protected]
Alya Nurina or Yasmin Kadir
Tel: (+603) 7958 8348
E-mail: [email protected]
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