Nestlé Achieves Solid Growth for First Nine Months Intensifying investment into trade and marketing to drive positive results

KEY HIGHLIGHTS

• Turnover increase by 4.8% to RM3.8 billion, driven by growth in domestic and export businesses.
• Intensified investment into trade and consumer promotions to strengthen market share for sustainable growth.
• Operating profit up by 12.1% to RM708 million for the first nine months of 2016, compared to the corresponding period last year.
• The Board of Directors has declared a second interim dividend of RM0.70 per share.

Nestlé (Malaysia) Berhad continued to see solid growth, with improved results for the first nine months of its financial year ended 30 September 2016. The Group’s turnover saw a 4.8% rise to RM3.8 billion, from RM3.6 billion in the previous year’s corresponding period.

Review of performance: Year-to-date, 2016 vs Year-to-date, 2015

For its first nine months, the Group recorded a turnover of RM3.8 billion, 4.8% higher compared to the same period last year. These results were driven by higher domestic sales and strong export growth.

The Group’s growth of 12.1% in Operating Profit to RM708 million was contributed by favourable commodity prices as well as efficiency increases in the factories and supply chain. The efficiency improvements were also used for the continuation of the Group’s innovation and product renovation drive as well as intensifying its trade and consumer promotions.
Mr Alois Hofbauer, Managing Director, Nestlé (Malaysia) Berhad, said, “Innovation continues to be a key driver for growth, and is part of our Nestlé DNA. We constantly look for new opportunities for growth as we adapt to our consumers’ evolving needs and expectations. This is why it is important for us to continue investing to grow the business sustainably.”

“We have always also focused on internal improvements to achieve higher end-to-end efficiencies and productivity, and this has brought positive results. We take a balanced approach in channelling a part of the savings from these efficiencies into investments for marketing and trade promotions. This has enabled the Group to maintain its growth trajectory,” he added.

Based on the growth, favourable commodities, higher efficiency, as well as a lower effective tax rate, profit after tax stood at RM570 million, marking a 16.1% jump from the previous year’s corresponding period.

A second net interim dividend of RM0.70 per share was declared for the financial year ending 31 December 2016, in keeping with the Group’s commitment to enhancing shareholder value.

Review of performance: Quarter 3, 2016 vs Quarter 3, 2015

For its third quarter ended 30 September 2016, the Group’s Gross Profit grew by 6.5% to RM491 million, compared with RM461 million in the corresponding quarter last year. This was achieved on the back of RM1.26 billion in turnover, an increase of 3.7%.

Mr Hofbauer commented, “We continue to invest into developing new products, and have intensified our trade and consumer promotions to strengthen our market share position for sustainable growth.”

“Our drive to innovate has resulted in successful launches of multiple new products which have supported business growth, contributing strongly to domestic sales as well as exports. These include NESTLÉ BLISS GO, NESTUM Banana Caramel, NESCAFÉ Tarik, as well as MAGGI OatMee. In addition to new products, we also look towards new opportunities by growing our E-Commerce business, and have launched exciting activities, such as the opening of the first KIT KAT Concept Store in Southeast Asia, the KIT KAT Chocolatory, where consumers have the chance to customise their own KIT KAT bars,” he added.

As a result of the Group’s reinvestment strategy, operating and net profit saw a marginal dip compared to the same quarter in the previous year, to RM193 million and RM161 million respectively.

Prospects

“Our “Fuel the Growth” strategy will remain a core focus for the Group in the coming months, with continuous efforts to further increase end-to-end efficiency. We intend to maintain a good balance between enhancing cost efficiency and channelling these savings to fuel trade and marketing investments, in order to support sustainable growth for the future,” said Mr Hofbauer.

“Taking into account the ongoing challenges facing the global and Malaysian economy, we are cautiously optimistic for further growth in both the short and long-term,” concluded Mr Hofbauer.

About Nestlé Malaysia

Nestlé, the world’s largest food and beverage manufacturer and a leader in Nutrition, Health and Wellness, is headquartered in Switzerland. Since 1866, Nestlé has been committed to providing high quality, tasty, safe and nutritious products to our consumers, in line with our promise of Good Food, Good Life. Nourishing Malaysians since 1912, Nestlé has earned the trust of our consumers through our quality brands and products, as well as our commitment to improve the lives of the communities in which we operate. At Nestlé, our consumers are at the heart of everything we do. We aim to delight our consumers by offering the best quality products; staying true to our Swiss roots while maintaining our Halal excellence and integrity. 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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