Message to Shareholders (Annual Report 2018)

Juan Aranols & Dato Sri Dato' Seri Syed Zainol Anwar Jamalullail From left: Juan Aranols, Chief Executive Officer and Y.A.M Tan Sri Dato' Seri Syed Anwar Jamalullail, Chairman

DEAR SHAREHOLDERS,

In 2018, Nestlé Malaysia further consolidated its position as the leading company in the dynamic fast moving consumer goods (FMCG) landscape. We generated good growth and maintained our competitive edge by continuing to adapt to the fast changing business environment. Our focus on innovation and continuous efficiency increases delivered sustainable growth and value to our consumers.

On behalf of the Board of Directors, we are very pleased to present the Company’s Annual Report for the financial year ended 31 December 2018.


ECONOMIC LANDSCAPE

2018 saw important changes in Malaysia’s political and economic landscape. Consumer sentiment improved after a difficult 2017, and benign international prices for most traded commodities also helped to protect consumers’ purchasing power.

In an international context, the world is increasingly defined by disruptive changes in global governance and trade rules that brings more uncertainty at different levels. These trends force companies like ours to remain vigilant and alert towards elements that can potentially impact the business. We also have to be very agile in constantly adapting the business and our organisation to seize new opportunities as well as address challenges.

NESTLÉ MALAYSIA’S STRONG FOCUS ON SUSTAINABLE GROWTH

Nestlé Malaysia is truly privileged to hold a very relevant position in the consumer landscape. Our brands have a proud presence in the lives of Malaysians, at home and out of home. Ensuring that they remain relevant, modern and continue to resonate with the evolving expectations of consumers is our paramount priority.

Throughout 2018, we continued to invest in our brands, not only to drive their short-term growth but more importantly to continue nurturing them for the longer run. Innovation remained an important part of our strategy and we embarked on intense innovation and renovation efforts throughout the year. These efforts saw positive acceptance amongst our consumers and customers. Internally, it was a year of significant change, with the divestment of our Chilled Dairy business and the opening of our new Nestlé Distribution Centre, as well as many other initiatives focused on driving efficiency at various levels. Moving forward, our investment behind brands, product innovation and renovation as well as our constant focus on efficiencies will continue to be at the heart of our strategy.

OUR PURPOSE AND VALUES

We remain fully committed to enhancing the quality of life of Malaysian families and contributing to their healthier future. With 106 years of a successful presence in Malaysia, we will continue to be guided by our values, which are deeply rooted in absolute respect for our community, our people at Nestlé and their families, as well as to a sustainable future. Our aim is to remain a beacon for good practice and the benchmark for Corporate Governance, while being a reliable and proactive partner in addressing and being part of the solution to complex societal problems, such as rising non-communicable diseases and environmental challenges, starting with the fight against plastic waste. We will actively seek partnerships with the authorities, non-profit organisations and other corporations to translate this intent into concrete actions that can make a positive difference in addressing these challenges.

We at Nestlé feel fully committed and responsible, both individually and collectively, to conduct our business consistently with our purpose and our values as we continue to positively impact and nourish the lives of Malaysians.

FINANCIAL PERFORMANCE

“We delivered industry-leading growth at 4.9%, with a market share of 15.7% and increased our profit before tax by 7.8%.”

2018 saw another year of good growth, both in our domestic business and in export activities. Profitability remained very strong as we benefited from internal efficiencies and favourability in the prices of traded commodities. We continued to drive marketing and trade investments to ensure the awareness and endorsement of our brands by our consumers and the competitive position of our products on the shelves while we continued to leverage the opportunities offered by the digital and e-Commerce landscape to test new ways of engaging with our consumers.

DIVIDENDS

The Board of Directors proposed a final dividend of RM1.40 per share for the financial year ended 31 December 2018, bringing total dividends for the year to RM2.80 per share. This positive evolution over prior years reflects our commitment to continue delivering sustainably high returns to our Shareholders.

CORPORATE GOVERNANCE

We believe that the highest standards of corporate governance should underpin the delivery of our strategies and the success of our business today. We adopt the strictest standards of compliance, accountability and transparency to ensure the trust of all our stakeholders.

In recognition of our good standard of corporate governance conduct and disclosure practices, Bursa Malaysia Berhad has included Nestlé Malaysia as one of the qualified companies under the Green Lane Policy (GLP) since November 2018. GLP aims to acknowledge qualified companies by facilitating a more efficient time-to-market for their corporate proposals.

With this recognition, Bursa Securities will no longer pre-vet circulars issued by our Company, except Complex Circulars. As part of our GLP privileges, Bursa Securities will fast-track the processing of Complex Circulars as well as other applications submitted to Bursa Securities. We are pleased to have been awarded GLP and its privileges, and will continue to maintain and enhance our good corporate governance practices.

AWARDS & RECOGNITIONS

Throughout the year, we were again the proud recipient of numerous prestigious awards. These recognitions are above all a tribute to the hard work and commitment of our teams in the Factories, in our Distribution Centres, in each and every one of our Sales Offices and at our Headquarters in Petaling Jaya. Importantly, we extend these recognitions to all our partners in business, most crucially our partners in distribution and our customers.

LIST OF AWARDS

  • Malaysia’s 100 Leading Graduate Employers Award 2018
  • National Annual Corporate Report Awards 2018
  • Global Good Governance Awards 2018
  • Thomson Reuters Top 100 Diversity & Inclusion Index 2018
  • Halal Development Corporation Awards 2018
  • Randstad Employer Brand Awards 2018
  • Graduates’ Choice Award 2018
  • Putra Brand Awards 2018
  • Malaysia’s Healthiest Workplace by AIA Vitality 2018 Survey

OUTLOOK

Looking at 2019, we have a robust plan in place to continue generating healthy, profitable growth despite potential cost inflation in traded commodities and other input costs.

However, we remain confident that the current environment of stability and positive economic momentum will be maintained.

We will continue to strive to create new consumption opportunities for our products, a steady stream of innovations and a mindset of constantly driving efficiencies that can provide the funds needed to increase the investment behind our brands, and hence more growth (a “virtuous circle”).

The strong performance of our Company in 2018 could not have been achieved without the dedication and leadership of our Management Team, as well as the efforts and good work of all our employees.

We will once again work in 2019 in partnership with all our employees, customers, suppliers, business partners and Shareholders. With their sustained and staunch support, we look forward to the future with great confidence.

We are also grateful to our consumers and all Malaysians who continue to place their trust in Nestlé and our brands. We at Nestlé Malaysia will continue to help Malaysians meet their daily nutrition needs and achieve their aspiration of leading healthier lifestyles every day.

Thank you.

Tan Sri Dato' Seri Syed Zainol
Anwar Jamalullail

Chairman

Juan Aranols
Chief Executive Officer