Nestle Annual Report

ANNUAL
REPORT

2018



ANNUAL REPORT 2018

INSIDE Chairman’s Statement 4-5
THIS Our Business 6-7
REPORT Management Discussion and Analysis
Balance Sheet 8
Income Statement 9
10

3

CHAIRMAN’S STATEMENT

JUAN ARANOLS Y.A.M. TAN SRI DATO’ SERI
Chief Executive Officer SYED ANWAR JAMALULLAIL

Chairman

DEAR SHAREHOLDERS, NESTLÉ MALAYSIA’S STRONG FOCUS
In 2018, Nestlé Malaysia further consolidated its ON SUSTAINABLE GROWTH
position as the leading company in the
dynamic fast moving consumer goods Nestlé Malaysia is truly privileged to hold
(FMCG) landscape. We generated good a very relevant position in the consumer
growth and maintained our competitive landscape. Our brands have a proud presence
edge by continuing to adapt to the fast in the lives of Malaysians, at home and out of
changing business environment. Our focus on home. Ensuring that they remain relevant,
innovation and continuous efficiency increases modern and continue to resonate with the
delivered sustainable growth and value to our evolving expectations of consumers is our
consumers. paramount priority.
On behalf of the Board of Directors, Throughout 2018, we continued to invest in
we are very pleased to present the our brands, not only to drive their short-term
Company’s Annual Report for the financial growth but more importantly to continue
year ended 31 December 2018. nurturing them for the longer run. Innovation
remained an important part of our strategy
4 and we embarked on intense innovation and
renovation efforts throughout the year. These
efforts saw positive acceptance amongst
our consumers and customers. Internally,
it was a year of significant change, with the
divestment of our Chilled Dairy business and
the opening of our new Nestlé Distribution
Centre, as well as many other initiatives
focused on driving efficiency at various levels.
Moving forward, our investment behind
brands, product innovation and renovation as
well as our constant focus on efficiencies will
continue to be at the heart of our strategy.

ANNUAL REPORT 2018

OUR PURPOSE AND VALUES OUTLOOK

We remain fully committed to enhancing the quality of life Looking at 2019, we have a robust plan in place to
of Malaysian families and contributing to their healthier continue generating healthy, profitable growth despite
future. With 106 years of a successful presence in Malaysia, potential cost inflation in traded commodities and other
we will continue to be guided by our values, which are input costs.
deeply rooted in absolute respect for our community, However, we remain confident that the current
our people at Nestlé and their families, as well as to a environment of stability and positive economic
sustainable future. Our aim is to remain a beacon for good momentum will be maintained.
practice and the benchmark for Corporate Governance, We will continue to strive to create new consumption
while being a reliable and proactive partner in addressing opportunities for our products, a steady stream of
and being part of the solution to complex societal innovations and a mindset of constantly driving
problems, such as rising non-communicable diseases efficiencies that can provide the funds needed to increase
and environmental challenges, starting with the fight the investment behind our brands, and hence more
against plastic waste. We will actively seek partnerships growth (a “virtuous circle”).
with the authorities, non-profit organisations and The strong performance of our Company in 2018 could
other corporations to translate this intent into concrete not have been achieved without the dedication and
actions that can make a positive difference in addressing leadership of our Management Team, as well as the efforts
these challenges. We at Nestlé feel fully committed and and good work of all our employees.
responsible, both individually and collectively, to conduct We will once again work in 2019 in partnership with all our
our business consistently with our purpose and our values employees, customers, suppliers, business partners and
as we continue to positively impact and nourish the lives Shareholders. With their sustained and staunch support,
of Malaysians. we look forward to the future with great confidence.
We are also grateful to our consumers and all Malaysians
FINANCIAL PERFORMANCE who continue to place their trust in Nestlé and our brands.
We at Nestlé Malaysia will continue to help Malaysians
We delivered industry-leading growth at 4.9%, meet their daily nutrition needs and achieve their
with a market share of 15.7% and increased our aspiration of leading healthier lifestyles every day.
profit before tax by 7.8%.
2018 saw another year of good growth, both in our
domestic business and in export activities. Profitability
remained very strong as we benefited from internal
efficiencies and favourability in the prices of traded
commodities. We continued to drive marketing and trade
investments to ensure the awareness and endorsement
of our brands by our consumers and the competitive
position of our products on the shelves while we
continued to leverage the opportunities offered by the
digital and e-Commerce landscape to test new ways of
engaging with our consumers.

5

OUR BUSINESS

OUR PRESENCE

SELANGOR KUALA LUMPUR NEGERI SEMBILAN
Head Office 1 KIT KAT CHOCOLATORY 2 Factories
4 Factories 1 Sales Station 3 Sales Stations
1 Nestlé Distribution 1 NESPRESSO Boutique
Centre
10 Sales Stations

KELANTAN
2 Sales Stations

TERENGGANU With our head office situated in Selangor, we SABAH
1 Sales Station currently operate seven manufacturing plants 3 Sales Stations
PERAK SARAWAK
6 Sales Stations across Malaysia. 1 Factory
PENANG To effectively reach out to our consumers 4 Sales Stations
3 Sales Stations nationwide, we have established a strong
network of 48 sales stations throughout
PERLIS Malaysia and Borneo, with teams that work
1 Sales Station closely with our distributors and customers

across the region.
In addition, the KIT KAT CHOCOLATORY

and the NESPRESSO Boutique
provide a unique consumer
experience.

JOHOR
7 Sales Stations

KEDAH MALACCA
2 Sales Stations 1 Sales Station
6

ANNUAL REPORT 2018

ABOUT NESTLE $$$ Turnover of
NESTLÉ MALAYSIA OFFERS
RM5.5 BIL
9 CATEGORIES OF PRODUCTS in 2018

Dairy The biggest
Beverages
Foods HALAL
Ready-to-Drink
Maternal & Child Nutrition producer in the
Healthcare Nutrition Nestlé world
Ice Cream
Confectionery 100%
Out-of-Home
of our manufacturing
HEAD OFFICE workforce is Malaysian

located in Operates
Mutiara Damansara,
7 FACTORIES
Selangor and a Nestlé
Distribution Centre
Employs more than
Market capitalisation of
5,200
People RM35 BIL

PUBLIC LISTED as of 31 December 2018

on Bursa Malaysia since 1989 Produces over

Commercial operations 500
in Malaysia
Halal products, with locally
SINCE 1912 made leading household
brand names such as MILO,

MAGGI and NESCAFÉ

7

MANAGEMENT DISCUSSION &
ANALYSIS

Turnover Pat
+4.9% +2.5%
RM5 519 million RM659 million

Operating PBT
profit +7.8%
+7.9% RM876 million
RM915 million

JUAN ARANOLS FINANCIAL REVIEW
Chief Executive Officer
“We are committed to delivering We saw another good year of growth in 2018,
consistent, sustainable results. driven by strong performance both in our domestic
Building on our strong foundation, and export businesses. We maintained strong
we are focused on driving growth profitability, delivered on the back of internal
and look forward to another year efficiencies and favourable commodity pricing.
of positively impacting Malaysians.” The Group recorded a higher turnover of RM5.5
billion, an increase of 4.9% over the previous year.
Domestic sales were driven by successful launches
of new products and strong marketing and trade
activities. Additionally, improved consumer
sentiment in the second quarter of the year coupled
with the 0% GST period from June to August 2018
led to increased consumer spending, further
contributing to our growth.
The stronger turnover along with better margins
resulted in a 9.6% increase in gross profit from
RM1.95 billion to RM2.14 billion. Proactive cost
management and effective marketing spend
contributed to the improved operating profit of
RM915 million compared with RM847 million in
the previous year, an increase of 7.9%, while profit
before tax grew by 7.8%. This was achieved on
the back of favourable material prices as well as
higher efficiencies and deeper cost improvements
throughout the value chain.
The Group also registered a one-off gain of RM9.4
million following the divestment of our Chilled
Dairy business. Profit after tax rose by RM16 million,
from RM643 million to RM659 million in 2018.

8

ANNUAL REPORT 2018

BALANCE SHEET

AS OF DECEMBER 31, 2018

In millions of CHF

Notes 2018 2017
Assets

Current essets 9 262
Cash and cash equivalents 942 339
Other current receivables 10 724
Prepayments and accrued income 65
Total current assets 1 269 32
1 095

Non-current assets
Financial assets 11 7 857 7 761
Shareholdings 12 28 693 32 006
Property, plant and equiptment
Intangible assets 13 1 1
Total non-current assets 2 508 95
39 069 39 863

Total assets 40 338 40 958

Liabilities and equity

Current liabilities
Interest-bearing liabilities 14 2 023 2 734
Other current liabilities 15 2 107 2 162
Accruals and deferred income 12 17
Provisions 16 596 514
Total current liabilities 4 738 5 427

Non-current liabilities 2 131 645

Total liabilities 6 869 6 072

Equity 17/18 311
Share capital 306 1 924
Legal retained earnings 1 929 23 319
- General legal reserve 18 19 299 5 111
Voluntary retained earnings 6 480 8 585
- Special reserve 18 12 268 (4 364)
- Profit brought forward 18 (6 813) 34 886
- Profit for the year 18 33 469
Treasury shares 18/19
Total equity

Total liabilities and equity 40 338 40 958

9

INCOME STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2018

In millions of CHF

Notes 2018 2017
Income form Group companies 2 15 285 12 316
Profit on disposal of assets 3 2 144 155
Other income 110 96
Financial income 4 202 407
Total income 17 741 12 974

Expenses recharged from Group companies 5 (2 543) (2 514)
Personnel expenses (146) (107)
Other expenses (196) (155)
Write-downs and amortization 6 (1 847) (889)
Financial expenses 7 (68) (93)
Taxes 8 (673) (631)
Total expenses (5 473) (4 389)

Profit for the year 12 268 8 585

10

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NESTLÉ (MALAYSIA) BERHAD

(110925-W)

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Selangor Darul Ehsan
Malaysia
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Fax (+603) 7965 6767

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