Nestlé Malaysia Posts Improved Q3 Turnover & PAT

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Amidst Multiple Pandemic Related Operational Constraints

KEY HIGHLIGHTS

• Turnover increased by 3.6% to RM1.44 billion in Q3 2021, on the back of solid sales growth in both domestic and export markets.
• Domestic business recorded a growth of 3.4%, despite the impact of the Enhanced Movement Control Order (EMCO) on Out-Of-Home (OOH) activities and limitation to operational capacity through most of Q3 2021.
• Profit After Tax grew by 15.3% to RM148 million in Q3 2021, primarily due to growth leverage, lower spending under EMCO and in spite of increasingly unfavourable commodities prices.
• Second interim dividend of RM0.70 per share declared.

Petaling Jaya, November 2, 2021 Nestlé (Malaysia) Berhad recorded an improved performance for its third quarter ended 30 September 2021, supported by resilient demand in its core F&B business, as well as exports. Through Q3, the Group continued to prioritise the safety of employees and business partners while ensuring supply continuity amid the operational restrictions of COVID-19 (i.e. 60% workforce limitation in factories).

Review of Performance (Quarter 3, 2021 vs Quarter 3, 2020)

Turnover for the quarter increased by 3.6% to RM1.44 billion from RM1.39 billion in the previous year's corresponding quarter. This was achieved on the back of solid sales growth in both domestic and export markets, which grew by 3.4% and 4.5% respectively, driven by the Group's F&B business recording a growth of 5.5% in Q3 2021. This was despite the restrictions of the EMCO enforced in Q3 2021, which further impacted the OOH business under Nestlé Professional.

Mr Juan Aranols, Chief Executive Officer of Nestlé Malaysia Berhad said, "Thanks to the dedicated efforts and resilience of our teams, the Group delivered a strong quarter in spite of multiple operational constraints. We have maintained our operations safely and continued to ensure stable supply to fulfil the solid demand for our brands, while ramping up our product innovation and accelerating our environmental actions."

During Q3, exciting product innovations were introduced, including NESCAFÉ ReadyTo-Drink Limited Editions (Gula Melaka, Pandan and Ros Bandung), NESCAFÉ Ice Caffé Latte, KIT KAT Chunky Raisin & Cookie and NESTLÉ Onde Onde Ice Cream. The Group accelerated the expansion of our plant-based range under HARVEST GOURMET and the Dairy Free MILO and NESCAFÉ drinks, while the nationwide roll out of LIVELY Tea gained momentum.

Profit Before Tax and Profit After Tax increased to RM207.6 million and RM148.0 million respectively in Q3 2021. This was mainly driven by the improved top line growth as well as lower marketing expenses, as marketing activities were limited due to EMCO restrictions in place during Q3 2021, as compared to Q3 2020 when restrictions were eased during the Recovery MCO. The improved profitability was slightly moderated by higher commodity prices and COVID-19 related expenses which remained sizeable in Q3 2021, reflecting the cost of the Group's ongoing COVID-19 antigen screening programme, provision of personal protective equipment for employees and other COVID-19 safety measures to ensure infection prevention and containment on-site.

Review of performance: Year-to-date 2021 vs Year-to-date 2020

For its first nine months ended 30 September 2021, the Group's Turnover increased by 5.6% to RM4.27 billion, from RM4.04 billion in the same period last year. This was mainly driven by domestic sales which grew by 6.3%, as the retail F&B business recorded a 6.2% increase.

Mr Aranols added, "Our earnings and sales growth for the first nine months of the year reflects the resiliency of our business and operations. Our key priorities have remained to ensure the safety of all employees and business partners as well as ensuring continuity in supply to our customers. On top of this, we have remained focused on delivering great-tasting, high quality and nutritious products that continue to resonate well with the evolving needs and expectations of our consumers."

The Group registered a higher Profit Before Tax of RM605.0 million for the first nine months of the year, up by 8.5% from the same period last year, while Profit After Tax grew by 8.9% to RM457.7 million. This was primarily due to the higher sales achieved and lower marketing spend, offset slightly by increased commodity prices as well as the significant COVID-19 related expenses, which have amounted to approximately RM65 million year to date.

Reflecting the Group's commitment to delivering value to shareholders, the Board declared a second interim dividend of RM0.70 per share for the financial year ending 31 December 2021, the same level as the second interim dividend of 2020.

"While delivering a solid performance, the Group has continued to provide support to the most impacted communities. Conscious of the hardship experienced by vulnerable communities during this time, we continue to provide relief through our various initiatives. As part of our efforts, we recently partnered with a local non-governmental organisation to distribute more than 20,000 nutrition packs to nourish B40 families. Our MAGGI Sah Malaysia campaign which celebrated 50 years of strong bonds with Malaysians also contributed 50,000 meal kits to B40 communities, and our food donations remain significant. Overall, some RM10 million have been allocated so far to community support initiatives in 2021."

Outlook

Commenting on prospects moving forward, Mr Aranols said, "We remain positive on the prospects ahead for Malaysia. With the national vaccination programme having surpassed 90% of the country's adult population, we are hopeful that Malaysia's economic recovery will further intensify in the coming months."

"Our sustainability journey continues to advance in 2021 and will further accelerate in 2022. We are accelerating our drive to shape a waste-free future and have expanded our Door-to-Door Collection and Recycling programme to new cities and aim to continue scaling it up to reach more communities. In Q4 2021, we are scaling up also the planting activities under Project RELeaf, once we overcome the pandemic limitations to mobility of recent months, to fulfill our pledge of planting 3 million trees by 2023.

"Looking ahead, a key challenge in the fourth quarter of the year will be the rising food commodity costs. We expect the impact to be more pronounced in the coming months and especially in 2022."

"Nevertheless, we are confident that we will maintain our positive momentum and deliver another year of solid results in 2021," concluded Mr Aranols.

About Nestlé Malaysia
Nestlé is the world's largest food and beverage manufacturer. Headquartered in Switzerland, Nestlé is present in more than 180 countries around the world, and our over 270,000 employees are committed to Nestlé's purpose of unlocking the power of food to enhance quality of life for everyone, today and for generations to come. Our performance is driven by our Nutrition, Health and Wellness strategy. Nourishing Malaysians since 1912, Nestlé has earned the trust of our consumers through our quality brands and products. We are committed to improving the lives of the communities in which we operate, whilst maintaining our Halal excellence and integrity.

This is in line with our promise of delivering GOOD FOOD, GOOD LIFE to all. To learn more about how we have been nourishing Malaysians for over a century, do visit www.nestle.com.my or our Facebook page at http://www.facebook.com/Nestle.Malaysia.

For more information, please contact:

Shaheen Zaffar
Nestlé (Malaysia) Berhad
Tel: +603 7965 6456
E-mail: [email protected]

Yasmin Kadir
acorn communications
Tel: (+603) 7958 8348
E-mail: [email protected]