PETALING JAYA: Nestle (Malaysia) Bhd is expected to sustain its earnings recovery this year, although analysts believe growth will moderate in the second half of financial year 2026 (2H26) following an exceptionally strong first-half performance.
Research houses remain positive on the consumer staples group, citing resilient demand, volume-led sales growth, easing raw material costs and improved operating efficiencies as key drivers.
While consumer spending remains cautious and commodity prices have turned more volatile, analysts believe the company is well positioned to deliver healthy earnings growth in 2026.
TA Research said; “While we expect Nestle Malaysia’s earnings growth to moderate in 2H26, the group remains on track to deliver healthy earnings growth for the financial year ending December 2026 (FY26).”
It expects continued volume expansion for Nestle Malaysia in both the domestic and export markets, improving margins from lower raw material costs recognised earlier this year, and stronger operating leverage to support performance.
Following the stronger-than-expected second-quarter results, the research house raised its FY26 to FY28 earnings forecasts by 5.1% to 8.2% and maintained its “buy” call.
CIMB Research echoed the positive outlook, saying management remains confident that demand will stay resilient while margins remain supported.
“We expect a stronger year-on-year (y-o-y) performance in 2H26, driven by improving demand, new product launches, and continued cost efficiencies, although we expect a weaker half-on-half performance owing to seasonal factors and higher input costs,” it said.
The research house added that first-half revenue growth was driven primarily by higher sales volumes rather than price increases, with stronger domestic and export sales contributing to a 7.5% rise in revenue and a 1.9 percentage-point expansion in gross profit margin.
Commodity costs remain a key area of focus.
TA Research noted that coffee and cocoa prices have risen since June, but said management “does not foresee any price increases in the near term” as existing inventories should support production through the third quarter.
However, the company has not ruled out price adjustments later in the year if elevated commodity prices persist.
Hong Leong Investment Bank Research also retained its positive view, saying; “We remain constructive on its outlook, anchored by proactive supply-chain localisation and defensive staples demand amidst macro volatility.”
It expects Nestle Malaysia’s ongoing efforts to localise sourcing, reduce supply-chain risks and strengthen its position as the group’s global halal manufacturing hub to underpin long-term growth.
