Message to Shareholders (Annual Report 2016)

Alois Hofbauer & Dato Sri Dato' Seri Syed Zainol Anwar Jamalullail From left: Y.A.M Tan Sri Dato' Seri Syed Anwar Jamalullail, Chairman and Alois Hofbauer, Chief Executive Officer - Nestlé (Malaysia) Berhad
Thank you to our people for delivering our commitments




On behalf of the Board of Directors, we are pleased to present the Annual Report of Nestlé (Malaysia) Berhad for the financial year ended 31 December 2016.

Economic Landscape

Financial markets across the world were impacted by global economic volatility in 2016, with lingering uncertainties, hazy prospects and subdued demand in both advanced and emerging markets.

Despite these tough conditions, domestic demand was stable; and on the back of Malaysia’s sound fundamentals, we achieved good growth in a difficult year. Our resilience is underpinned by our strong portfolio of successful brands, a highly capable talent pool and above all, our culture of continuous improvement in our operations and emphasis on innovation.

Reigniting the Growth: Our FIT Approach

Our improved performance for the year was driven by our commitment to reignite the growth of the Company, propelled by our long-term strategy known as FIT. This represents the key pillars of ‘Fuel to Grow’, ‘Innovate to Grow’ and ‘Transform to Grow’. Our FIT strategy focuses on enhancing efficiencies and encouraging innovation throughout the Company, with highlyengaged employees to fuel our growth.

Financial Performance

The Group achieved a milestone by crossing the threshold of RM5 billion in revenue, with a turnover of RM5.1 billion for the year.

The key driver for this performance is reflected in our FIT strategy. In line with this strategy, we continuously invest in marketing and trade activities, product innovations, as well as productivity improvements throughout our operations.

Through these initiatives, we successfully expanded our market share in major product categories and strengthened growth in both domestic and export markets. Domestic sales continued to be a key contributor, achieving solid 3.3% growth despite a soft F&B market in Malaysia. This was driven by the Group’s continuous product innovations in tandem with successful marketing and trade promotions. Similarly, the export business demonstrated strong growth with an increase of 9.6%, an excellent improvement compared with the previous year.

Dividends

We are committed to deliver the best value to our shareholders via consistent dividend payments. In line with this, the Board of Directors proposed a final dividend of RM1.30 per share for the financial year ended 31 December 2016.

Cumulatively, this will bring total dividends for the year to an all-time high of RM2.70 per share.

Corporate Governance

We believe that the highest standards of corporate governance are critical to the success of our business today. Good governance underpins the delivery of our strategy to become the best at what we do and generate sustainable returns for shareholders. The Nestlé Board of Directors commits itself to ensuring good governance is embedded in the thinking and processes of the business. During the year under review, a tremendous amount of progress went into strengthening our governance processes. We instituted our new Anti-Corruption, Gifts and Entertainment guidelines. We simplified our Monitoring and Review processes to align better with our Internal Controls and to encourage the sharing of compliance documents. We drove awareness programmes to promote the importance of compliance processes and we revamped both our Corporate Governance, Risk and Internal Control statements to better reflect our commitment to best-in-class governance practices.

Awards & Recognition

In recognition of our employee engagement efforts, the Company received several top level accolades in 2016, including ‘The Most Popular Graduate Employer in the FMCG Category’ for the fourth consecutive year by Grad Malaysia, Bronze for Best Graduate Programme at the Asia Recruitment Awards 2016 and Top 3 Most Attractive Employers in Malaysia at the Randstad Award 2016.

For the first time ever, Nestlé Malaysia was also awarded ‘Company of the Year’ by The Edge Billion Ringgit Club 2016 in recognition of our strong financial results over the years as well as our unwavering commitment towards Creating Shared Value.

The Company was also recognised in the Minority Shareholder Watchdog Group (“MSWG”) Awards 2016. This award acknowledges public-listed companies that demonstrate best practices for corporate governance, disclosures, transparency and good corporate governance.

Along with this, MILO earned the leading people’s choice award, at the Putra Brand Awards 2016 for its excellent product innovation efforts as well as its commitment to continuously strengthen the brand. MILO also clinched the Gold Award for the Beverages category, once again proving to be the favourite drink of Malaysians.

Outlook

Although the global economy is set to remain soft and volatile in 2017, domestic demand remains a key engine of growth for Malaysia.

As Malaysia's number one F&B manufacturer, the Company is well-positioned to capitalise on the vast inherent potential of the nation. Supported by strong short-term results, we are focused on ensuring the long-term, sustainable growth of the Company by leveraging on our FIT strategy to maintain our momentum.

As the world’s leading Nutrition, Health and Wellness Company, our core objective remains unchanged: to provide Malaysians with high quality, great-tasting nutritious offerings that help our consumers lead healthier lives.

Appreciation

As we mark the end of another successful year, the Board would like to thank the Management Team for their unwavering commitment and guidance in leading the Company forward.

We would also like to extend our deepest gratitude to all employees for their invaluable contributions to the Company.

Last but not least, to our consumers, partners, distributors and customers, thank you for your continued support and loyalty to our Company and brands.


Thank you.

Tan Sri Dato' Seri Syed Zainol
Anwar Jamalullail

Chairman

Alois Hofbauer
Chief Executive Officer - Nestlé (Malaysia) Berhad