Nestle posts stronger net profit of RM673m for FY19


  • Corporate News
  • Tuesday, 25 Feb 2020

Nestle Malaysia CEO Juan Aranols remains upbeat for FY2020, "adding we will continue to focus on driving strong growth momentum, nurturing our brands and building capabilities to continue delivering sustainable and profitable growth".

KUALA LUMPUR: Nestle (Malaysia) Bhd posted a firmer set of net profit for the financial year ended Dec 31,2019, supported by strong operational sales execution, anticipation of market trends and a sustained stream of innovations throughout the year.

In its announcement to Bursa Malaysia on Tuesday, it said that it posted net profit of RM673.91mil, which was 2.1% higher than FY18's RM658.88mil. Its revenue was flat at RM5.518bil compared with RM5.519bil a year ago.

In the fourth quarter, its net profit increased at a stronger pace of 6.5% to RM131.82mil from RM123.82mil a year ago. Its revenue was lower at RM1.328bil compared with RM1.347bil.

Earnings per share were 56.21 sen compared with 52.80 sen. It announced a dividend of RM1.40 a share, similar to a year ago. For FY19, Nestle's dividend was RM2.80, similar to a year ago.

Its chief executive officer Juan Aranols said: “These results reflect the solid foundations of Nestle Malaysia and the efforts deployed to continue delivering strong results in spite of a difficult environment. Our local sales growth at 4.7%, net of the Chilled Dairy divestment, is ahead of the market growth and confirms that our brands remain highly relevant and present in the life of Malaysians”.

“Our solid performance in Malaysia was supported by strong operational sales execution, leveraging market trends and a sustained stream of innovations throughout the year, many of which are resonating well with our consumers, ” added Aranols.

In FY19, Nestle said consumer demand had been challenging but the company managed to record a turnover of RM5.52bil. “Adjusted for the chilled dairy business divestment, the turnover growth is equivalent to 1.6%, which is driven by growth in domestic sales at 4.7%, ” it said.

Nestle said it managed to record higher net profit in spite of higher commodity prices and unfavourable exchange rates, mitigated through its continued focus on driving efficiencies and savings to protect the financial performance.

“The good performance in 2019 was supported by strong operational sales execution, anticipation of market trends and a sustained stream of innovations throughout the year.

“Successful launches in 2019 included the extension of the Maggi Pedas Giler range, new ready-to-drink variants including Nescafe Tarik Kurang Manis and Milo Protein Up, the launch of Starbucks at Home range, Nestum Brown Rice, as well as the renovation of our Ice Cream La Cremeria range, to mention a few, ” it said.

For the fourth quarter ended Dec 31,2019, the group recorded good domestic sales growth of 2.8% (4.7% after adjustment for divestment of the chilled dairy business) on top of strong results in 4Q 2018.

“Total turnover growth for the quarter (-1.4% reported, 0.1% net of the chilled dairy divestment) was still impacted by subdued export demand against the backdrop of regional and global uncertainties.

“The strong growth in the domestic business was supported by strong sales execution, successful product innovations and effective marketing activities.

“We introduced new products that have resonated well with consumers such as Milo Nutri Pluz, Maggi Pazzta, Kit Kat Mandarin Orange and Kit Kat Stick Ice Cream, to name a few, ” it said.

Nestle added the positive results were achieved on the back of the robust domestic sales and continued focus on demand generation funded by efficiencies and savings.

On the outlook, Nestle said it was encouraged by its FY19 performance, particularly in the context of the volatile trading environment.

“Building on this in 2020, we will continue to focus on driving strong growth momentum, nurturing our brands and building capabilities to continue delivering sustainable and profitable growth.

“We foresee the soft consumer demand will continue to prevail as well as pressure from external factors, including commodity prices or any of the several crisis that the world is confronting in this early part of the year.

“However we remain optimistic that with our strong fundamentals and our focus on consumer-driven commercial activities, we are well-positioned to achieve continued growth in 2020, ” it said.

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