Nestlé crosses RM5 billion Turnover mark for FY2016 despite tough headwinds

KEY HIGHLIGHTS

• Improved top and bottom line results for FY2016, driven by product innovations and successful consumer-centric marketing and trade promotions.
• Profit After Tax of RM637 million, a 7.9% increase from the previous year.
• Proposed final dividend of RM1.30 per share at the Annual General Meeting.

Nestlé (Malaysia) Berhad delivered a commendable performance for its financial year ended 31 December 2016. The Group also crossed the RM5 billion Revenue milestone with a Turnover of RM5.1 billion in 2016. This marked a 4.7% increase from the previous year. Despite challenges in 2016, the Group recorded a higher Profit After Tax of RM637 million, up by 7.9% from the previous year.

Mr. Alois Hofbauer, Chief Executive Officer of Nestlé (Malaysia) Berhad, commented after the Group’s Annual General Meeting: “The Group continues to be propelled by our long-term FIT strategy, representing the key pillars of ‘Fuel to Grow’, ‘Innovate to Grow’ and ‘Transform to Grow’. This strategy has indeed proven to be effective, as demonstrated by our strong performance for the year.”

Domestic sales were a key contributor to the Group’s performance in FY2016 with 3.3% growth. This was mainly attributable to product innovations as well as successful marketing and trade promotions, which enabled the Group to expand market share in major product categories. Further to this, savings from favourable commodity prices and improved operational efficiencies in the factories and supply chain were partially reinvested into strong consumer-centric marketing and trade promotions and new product launches. The export business also demonstrated strong growth, with an increase of 9.6%.

Amongst the innovations introduced in 2016 were the NESCAFÉ Gold Blend Barista Machines, MAGGI OATMEE Mi Goreng Kari Flavour, NESTLÉ OMEGA PLUS Milk with Oats, NESTLÉ BLISS GO and MILO frozen confection. In addition to these, the Group implemented innovative business models, including the first KIT KAT Chocolatory boutique in Southeast Asia, as well as tripling our e-Commerce business and launching our flagship first-ever multi-brand e-Commerce wellness store.

As part of the Group’s commitment to enhancing value for shareholders, during the Annual General Meeting the Board recommended a final dividend of RM1.30 per share for the financial year ended 31 December 2016. This brings the total dividend for the financial year 2016 to RM2.70 per share, a record-high for the Group.

Q1 FY2017

Building on this momentum, the Group kicked off the current financial year on a high note, registering a turnover of RM1.4 billion for its first quarter ended 31 March 2017, reflecting a 4.4% increase from the previous year’s corresponding quarter.

This was driven by improved contributions from both domestic and export sales. The domestic business experienced robust growth of 4.7% on the back of strong marketing and trade promotions, as well as a solid base created by products introduced in the last two years that continue to benefit the Group. Our decision to invest upfront in marketing and trade promotions in the last quarter of 2016 has clearly paid off and led to positive results in this quarter.

As part of the Group’s innovation drive, new product innovations were launched during the quarter under review, namely MAT KOOL Panda, NESCAFÉ Gold Creamy Latte and Dark Latte, MAGGI Hot Mealz, MAGGI Roasted Sesame Chicken Noodles and KIT KAT Mini. Export sales also delivered a solid performance, recording 3.6% growth for the quarter.

The Group’s profit structure remained healthy, supported by internal efficiency initiatives and diligent cost management which helped to mitigate higher commodity prices and the weaker Ringgit. As a result of these measures, Profit After Tax for the quarter rose by 4.4% to RM230 million.

Outlook

Mr. Hofbauer said, “Although market conditions are expected to remain challenging in 2017, we are confident that our resilient foundation will enable the Group to continue delivering results. This is propelled by our strategy to Fuel, Innovate and Transform to Grow.”

“We continue to be driven by our purpose – enhancing quality of life and contributing to a healthier future – through which we create value for our shareholders. Delivering on our purpose, we are committed to offering tastier and healthier food and beverages to nourish healthier and happier Malaysians. This is in line with our promise to deliver Good Food, Good Life to all,” concluded Mr. Hofbauer.

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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