Nestle Malaysia : Nestlé Malaysia improves growth momentum in Q1 2021

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COVID context continues to weigh down OOH channels

KEY HIGHLIGHTS

• Turnover increased to RM1.45 billion, in spite of the persisting operational challenges in Out-Of-Home activities, impacted by COVID-19 control measures across Malaysia.
• Strong growth of Core Food and Beverages supported by solid in-home consumption and successful execution of commercial activities throughout CNY.
• Solid Profitability After Tax at RM175.2 million. COVID-19 related expenses (specially workforce safety related) remain material, while Out of Home Businesses remain significantly below the pre-COVID levels impacting total profits.
• Q1 2020 impact from COVID-19 was relatively contained as the first MCO started only in March 18th, while MCOs have been in effect through most of Q1 2021.
• After completing the 2020 investment plan of RM295 million, Nestlé will invest RM300 million CAPEX in 2021, the highest level since 2015, despite the executional challenges imposed by COVID-19.

Petaling Jaya, April 27, 2021 - Nestlé (Malaysia) Berhad recorded another quarter of resilient results for the quarter ended 31 March 2021, while continuing to ensure safe operations in the workplace and continuity in the supply chain amidst the constraints imposed by ongoing MCOs and the recent disruptions of global ocean freight logistics.

Review of Performance (Quarter 1, 2021 vs Quarter 1, 2020)

Turnover for the quarter increased by 1% to RM1.45 billion vs previous year's corresponding quarter. The key contributor was the core F&B business, which recorded a growth of 5%, driven by robust in-home consumption, with good momentum across most brands. However, this was moderated slightly by Out-of-Home (OOH) activities, still much impacted by MCOs and its impact on the OOH sectors. OOH Sales remain still significantly below the pre-COVID baseline.

Mr Juan Aranols, Chief Executive Officer of Nestlé (Malaysia) Berhad said, 'All things considered, Q1 2021 reflects the ability of our teams to continue to drive growth and sustain performance amidst the very challenging pandemic conditions. Across brands, we have seen very strong activities that have resonated well with Malaysians. We are thankful for the trust given by millions of Malaysian families who continue making our brands part of their daily lives. Kudos also to our Sales Teams for the very effective execution in store of commercial activities, and to all those involved in our Supply Chain and Manufacturing for ensuring supply continuity while protecting the workforce across all our sites. This focus on people's safety and product supply continuity will remain unchanged as the pandemic conditions remain.'

Important innovations were launched in Q1. First and foremost, the Group unveiled its Plant Based Meals Solutions factory in Shah Alam and started the distribution of the range into selected restaurant channels. Roll out into retail stores and on-line is advancing in Q2. Building on the successful introduction of MAGGI Sambal Tumis, the Group has also introduced a full range of MAGGI paste Recipe mixes, while Ice-Cream and Confectionery saw great successes with KIT KAT Gold, amongst other innovations.

Profit Before Tax ('PBT') reached RM220.4 million for the quarter. This result is after the RM22 million COVID-19 related expenses to ensure the safety of our employees and continuity of operations, such as the ongoing COVID-19 antigen screening programme. In combination with strong SOPs in the workplace, this program remains critical under current external conditions. Profit After Tax ('PAT') was close to prior year result, as it was cushioned by the Reinvestment Allowance tax incentive for the Group's new PlantBased Meal Solutions ('PBMS') manufacturing facility.

'In addition to the financial results, other important milestones were achieved in the quarter. Our sustainability focus remains undeterred and we saw great progress in our partnership with MBPJ to drive kerbside collection and recycling amongst the community. We also had the honour of receiving the Prevention of Outbreak at Ignition Site ('POIS') recognition from the Selangor State Government for the effectiveness of our SOPs against COVID-19. Last but not least, we continue to support the community through multiple donation activities and also by establishing a site to serve as a buffer location for isolation of potential COVID-19 cases', Aranols added.

2021 Outlook

Regarding the prospects for the year, Mr Aranols indicated 'We are confident to maintain solid growth momentum for the balance of the year and across businesses. We are encouraged by the recovery signs in Out Of Home Channels, while we have high confidence in the sustained momentum of our brands as preferred choices by Malaysian families. We will continue to work hard to meet consumer expectations and keep our brands close to their hearts as part of their daily lives. The opening of our Plant Based Meals Solutions factory goes in this direction of constantly looking at long term opportunities, investing early and being first to capture the opportunities offered by consumer's evolving expectations and demands.'

'In 2021 we will further renew our commitment with Malaysia by allocating RM300 million of CAPEX to ramp up production capacity in several factories and upgrade technology for increased productivity and efficiency, as well as adoption of state-of-theart automation and digitalization. And we will also continue driving our sustainability efforts across multiple fronts, with focus on Reforestation, Plastic Reduction/Collection and Recycling and actions to reduce the CO2 footprint of our operations.'

'With all the above in place, we are cautiously optimistic to deliver another solid year in 2021, with top line growth and resilient margins, amidst the volatility in many commodity markets and the ongoing disruptions in the ocean freight transportation,' 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 291,000 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: [phone]
E-mail: [email protected]

Alya Nurina or Yasmin Kadir
acorn communications
Tel: [phone]
E-mail: [email protected]

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