Business News

Friday, 28 April 2017

Nestle eyes RM500mil in e-commerce sales

Chief executive officer Alois Hofbauer(pic) said Nestle has tripled its e-commerce sales in 2016 versus 2015.

Chief executive officer Alois Hofbauer(pic) said Nestle has tripled its e-commerce sales in 2016 versus 2015.

KUALA LUMPUR: Leading food and beverage player Nestle (M) Bhd is optimistic of achieving RM500mil in e-commerce sales in the next three to five years backed by the rapid expansion in the digital space.

Chief executive officer Alois Hofbauer said Nestle has tripled its e-commerce sales in 2016 versus 2015.

“We started our e-commerce store sometime in 2015 using Lazada’s and 11th Street’s platform and ever since then we are witnessing rapid expansion in this space.

“Going by this, we might achieve the RM500mil sales target in the e-commerce space faster in the next three to five years,” Hofbauer said during a media briefing after Nestle’s 33rd AGM yesterday.

While many firms had sacrificed brand investment last year in the surface of a subdued consumer sentiment, he said Nestle was aggressive and invested 50% more in marketing and branding to deliver growth.

“This has somewhat given us stronger earnings and revenue in the first quarter ended March 31, 2017,” he noted.

That said, Nestle does not intend to reduce its advertising expenditure (adex) in print, television or radio, but will go all out in marketing in the digital space, going forward.

In 2016, the company was ranked top three among advertisers in Malaysia with close to RM500mil in adex.

On capital expenditure (capex), he said the company will be allocating RM200mil for capex this year, from RM123mil last year.

“This will be spread equally in all product categories, including refurbishing our warehouse,” he said.

Meanwhile, Nestle’s improved operational efficiency in its facilities and supply chain as well as its strategy to fuel, innovate and transform will help mitigate the impact of higher commodity prices and weaker ringgit.

“Year-on-year, we have worked on optimising end-to-end processes.

“Despite the rising raw material prices, we have lowered conversion costs and this has enabled us to maintain our pricing structure.

“We have also generated close to RM200mil in savings to be re-invested into growing the business,” he added.

For the first time in history, Nestle reached the RM5bil sales target, driven by domestic and export sales.

Nestle booked a 4.4% hike in net profit to RM230.43mil for the first quarter ended March 31, 2017, from RM220.68mil, a year ago on the back of a 4.4% rise in revenue to RM1.37bil from RM1.33bil.

The stellar performance was driven by both domestic and export sales, which grew 4.7% and 3.6%, respectively.

On whether the company will increase prices of products, Hofbauer said it will only consider revising prices in a sensible manner depending on the usage of raw materials.

However, this will be Nestle’s last resort, he concluded.

Tags / Keywords: Earnings , Stocks , Investing , Nestle M bhd

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