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Nestlé Malaysia delivers sales and profit acceleration in Q2

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Efforts continue to ensure employees’ safety and support to the community amidst COVID-19 pandemic

KEY HIGHLIGHTS

  • Turnover increased by 13.2% to RM1.38 billion in Q2 2021, supported by solid performance in the core food and beverage (F&B) business and some recovery in Out-Of-Home (OOH) activities (depressed Q2 2020 baseline during MCO)
  • Profit After Tax improved by 27.5% to RM134.5 million on the back of strong top line growth, and in spite of significant COVID-19 related expenses to protect employees and ensure operational continuity
  • Net interim dividend of RM0.70 per share declared

Petaling Jaya, August 24, 2021 - Nestlé (Malaysia) Berhad’s momentum accelerated in Q2 2021 reflecting solid in-home consumption and the Company’s continuous focus in ensuring continuity in supply to customers amidst COVID-19 related operational restrictions, as well as the relentless focus in ensuring the safety of all employees and business partners.

Review of Performance (Quarter 2, 2021 vs Quarter 2, 2020)

Turnover for the quarter increased by 13.2% to RM1.38 billion from RM1.22 billion in the previous year’s corresponding quarter. This was driven by robust domestic sales growth of 15.8%, on the back of the Group’s strong core F&B business, which grew by 8.4% in Q2 2021. The Out-Of-Home business under Nestlé Professional saw a solid improvement against very low sales in the same quarter last year when the early lockdowns had the most dramatic impact on this sector of activity. The focus on supplying the local market amidst operational restrictions had some impact on the export business, which only grew by 2.5% in Q2 2021.

Mr. Juan Aranols, Chief Executive Officer of Nestlé (Malaysia) Berhad said, “Our key priority remains to ensure people’s safety and supply continuity, which has required an immense effort and resilience from all our teams. Systematic antigen testing of the workforce and solid containment SOPs have been instrumental in keeping our sales and operations running to fulfil the solid demand we have seen across most of our brands. While COVID-19 continues to have an impact in the short term, we continued building capabilities for the future, entering new high growth categories, as well as advancing on our environmental sustainability programmes.”

The Group indeed delivered a sizeable stream of new products during the quarter. This included the roll-out of the HARVEST GOURMET plant-based range into the retail market and the introduction of Dairy-Free versions of MILO and NESCAFÉ. Other new products launched in Q2 2021 include the LIVELY Tea range, the extension of the Iced NESCAFÉ range and entrance into the chocolate tablet market segment with the new KIT KAT Blocks.

Profit Before Tax and Profit After Tax increased to RM177.0 million and RM134.5 million respectively in Q2 2021. This solid recovery vs Q2 2020 was mainly driven by the top line acceleration and was slightly moderated by higher commodity prices and increased marketing spend compared to the MCO period in 2020. Additionally, the COVID-19 related expenses remained sizeable in Q2 reflecting the cost of the mass antigen screening programme, PPEs and other measures to ensure infection prevention and containment on site.

Review of performance: Year-to-date 2021 vs Year-to-date 2020

For its first half ended 30 June 2021, the Group’s Turnover increased by 6.6% to RM2.83 billion, from RM2.65 billion in the same period last year. This was mainly driven by domestic sales which grew by 7.7%, as the core F&B business recorded a 6.7% increase while the OOH business continued its gradual but firm recovery against low sales registered in the same period last year due to the impact of the MCO.

Mr. Aranols added, “The H1 results confirm the resiliency of our model based on driving sustainable growth year after year, boosted by efficiencies, brand support and innovation. We will continue to work hard every day to meet the expectations of the Rakyat with great tasting, high quality and nutritious products.”

The Group registered a higher Profit Before Tax of RM397.4 million for the first half of the year, up by 2.8% from the same period last year. This was primarily due to the higher sales achieved, offset slightly by increased commodity prices and marketing spend, as well as the significant COVID-19 related expenses, which amounted to close to RM50 million. The Group recorded a higher Profit After Tax of RM309.7 million, which was also supported by lower taxes due to the Reinvestment Allowance tax incentive for the Group’s new Plant-Based Meal Solutions manufacturing facility.

Reflecting the Group’s commitment to delivering value to shareholders, the Board declared an interim dividend of RM0.70 per share for the financial year ending 31 December 2021, the same level as the first interim dividend of 2020.

Outlook

Commenting on prospects for the balance of the year, Mr. Aranols said, “The progress in the national vaccination programme has been impressive and it does show the best of the ‘Malaysia Boleh!’ spirit that inspires all of us at Nestlé Malaysia to do our best every day. With the light at the end of the tunnel now in sight, we hope for all Malaysians suffering from this pandemic to protect their lives and recover their livelihoods. Throughout H1 2021 we have continued to provide relief to communities, contributing some RM7.5 million to food banks and support to NGOs. We are also doing our part to encourage all Malaysians to get vaccinated, through our ‘Join the fight. Stop Covid 19’ call to arms which includes rewarding vaccinated Malaysians with 25,000 vouchers of RM20 each.”

“Counting on a progressive normalisation of economic activities, the main challenge for the balance of the year will come from the impact of rising food commodity costs that we have mitigated through H1 with our hedging policies. This impact will become more noticeable in the months ahead.”

“That being said, we remain confident to deliver another solid year in 2021, with good sales growth and resilient bottom-line performance.”

“Building on our good momentum, we remain focused on driving our positive trajectory in the second half of the year as we strive to deliver sustainable growth for 2021, while supporting Malaysia on the road to recovery,” concluded Mr. Aranols.

About Nestlé Malaysia
Nestlé is the world’s largest food and beverage manufacturer. Headquartered in Switzerland, Nestlé is present in more than 180 countries around the world, and our over 270,000 employees are committed to Nestlé’s purpose of unlocking the power of food to enhance quality of life for everyone, today and for generations to come. Our performance is driven by our Nutrition, Health and Wellness strategy. Nourishing Malaysians since 1912, Nestlé has earned the trust of our consumers through our quality brands and products. We are committed to improving the lives of the communities in which we operate, 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/Nestle.Malaysia.


For more information, please contact:

Shaheen Zaffar
Nestlé (Malaysia) Berhad
Tel: +603 7965 6650
E-mail: [email protected]

Alya Nurina or Yasmin Kadir
acorn communications
Tel: +603 7958 8348
E-mail: [email protected]