PETALING JAYA: Analysts expect Nestlé (M) Bhd’s demand in the second half of financial year 2026 (2H26) to remain stable after it reported results that exceeded some expectations.
TA Research said this would be supported by management’s proactive marketing initiatives aimed at stimulating consumer demand during seasonally softer periods.
For instance, the group has launched the third edition of its Gaji Seumur Hidup campaign, which will run from Aug 1 to Sept 30 to encourage consumer spending while strengthening community engagement, it said.
It said overall, it believed the group remains on track to deliver a commendable financial year 2026 (FY26) performance.
This is underpinned by resilient demand for daily essentials, supported by the Sumbangan Asas Rahmah or Sara assistance programme, manageable input cost pressures with sufficient raw material inventories secured through the third quarter of FY26 (3Q26) and a gradual inventory build-up strategy to mitigate future raw material price volatility; and lastly, improved operational efficiency, benefiting from economies of scale.
It said the group’s results exceeded expectations with 1H26 core earnings of RM338.8mil accounting for 59% of its full-year forecast and 56% of consensus estimates. The earnings beat was mainly driven by stronger-than-expected earnings before interest and tax margin expansion and lower-than-anticipated interest expenses in 2Q26, it noted.
For 2Q26, Nestle recorded a net profit of RM155.02mil, up from RM112.11mil in 2Q25. The improvement was underpinned by broad-based growth across categories, effective cost management and efficiencies across the value chain, the company said.
An analyst told StarBiz that Nestle had ramped up its growth strategies in the last few quarters while controlling its costs “effectively”. “It is starting to pay off.”
For 1H26, its net profit increased to RM360.13mil compared to RM273.45mil the year before, while revenue reached RM3.69bil, a 7.5% rise from RM3.44bil in 1H25.
The stronger first-half performance was supported by disciplined cost management and ongoing operational efficiencies, the group said.
Nestle also announced an interim dividend of 80 sen per share for FY26, up from 70 sen per share in the same period the previous year.
Hong Leong Investment Bank (HLIB) Research said it deemed the results within expectations, reflecting a strong festive 1Q26 base and 2Q26 normalisation.
Its research arm said it remained constructive on Nestle’s outlook, anchored by its supply-chain de-risking initiatives, disciplined cost management, and resilient staple demand amidst macro volatility.
Like TA Research, it has reiterated its “buy” call on the company with a target price of RM135 while TA Research has a target price of RM124.70 on it. At last look, it was at RM96.60.
HLIB Research said Nestle management’s continued expansion of its Farmer Connect programmes (covering key ingredients like chilli, paddy, coffee and cocoa) ensures supply reliability and mitigates raw material volatility.
While management explicitly noted that the 2026 external environment remains volatile, it said it believes the group is exceptionally well-positioned to weather these headwinds anchored by a diversified portfolio of trusted brands, an extensive local manufacturing footprint, and highly efficient downstream capabilities, as well as disciplined cost management.
