NESTLÉ MALAYSIA
A STRONG PERFORMANCE
NESTLÉ MALAYSIA
WE LEARN HOW NESTLE MALAYSIA HAS CONTINUED TO PERFORM WELL EVEN IN THE FACE OF A PANDEMIC.
A STRONG PERFORMANCE PROJECT MANAGED BY: GARY SMITH
Nestlé has been active in Malaysia since 1912 offering a range of brands and products in line with Halal standards. Their stated goal is to enhance the quality of life and contribute to a healthier future for Malaysia while delivering “Good food, good life” to all. The international good giant’s operations in Malaysia began when, as the Anglo-Swiss Condensed Milk Company, they set up shop in Penang and later, thanks to growth and expansion, moved to Kuala Lumpur in 1939.
“W
hen Malaysia achieved independence in 1957 the country needed increased job opportunities and product options, a need which led to Nestle establishing its Culinary Products Division in the mid-1960s to produce culinary solutions under the popular MAGGI trademark. This resulted in the establishment of Nestle’s first manufacturing facility in Malaysia. In today’s Malaysia, Nestle Malaysia is operating six factories and employing over 4,600 people across the country, producing a portfolio of over 500 Halal-certified products. A number of the company’s key brands have become familiar sights in Malaysian households for generations, including MILO, MAGGI, NESCAFÉ and KITKAT. Nestle has pointed to sustainability as a big part of its operations, and the company uses a responsible sourcing programme with their Tier One suppliers.
WEATHERING TOUGH TIMES
Recent months have been hard for businesses across all sectors. However, Nestle Malaysia has reported stable figures from the first quarter
BUSINESSFOCUSMAGAZINE.COM
of 2020 compared to the same period last year. During the period that marked the emergence of COVID-19 and the beginning of lockdown, Nestle Malaysia’s turnover remained at a stable RM1.43 billion amidst COVID-19 and an earlier Chinese New Year vs 2019. While the temporary closure of Out-of-Home retail channels under Malaysia’s Movement Control Order has impacted the company, they have been able to compensate for that with exports recovery and solid sales for in-home consumption. They have also announced new CAPEX projects worth RM280 million, the highest investment seen by the company in the last six years. Nestlé Malaysia’s results for the quarter ending on the 31st of March 2020 have been resilient at a time when the market has been defined almost exclusively by the efforts to control the COVID-19 pandemic. Their RM1.43 billion turnover nearly matched the RM1.45 billion seen last year, when the company had benefited from a more favourable Chinese New Year timing. Juan Aranols, the CEO of Nestle Malaysia said of the figures, “Our results for the
BUSINESS FOCUS MAGAZINE | 3
NESTLÉ MALAYSIA
“OUR RESULTS FOR THE QUARTER APPEAR RESILIENT, GIVEN THE EARLIER TIMING OF CHINESE NEW YEAR AND THE WIDESPREAD EFFECTS OF COVID-19 AND THE MCO IN SOME SECTORS OF ACTIVITY.”
BUSINESSFOCUSMAGAZINE.COM
quarter appear resilient, given the earlier timing of Chinese New Year and the widespread effects of COVID-19 and the MCO in some sectors of activity. The slight contraction in domestic sales during the quarter resulted from a strong performance in in-home consumption channels, offset by a sizeable temporary dip in the Out-of-Home business. More concretely, our Out-of-Home business, like the rest of the sector, has been affected first by Malaysia’s declining eating out frequency since the start of the pandemic, followed by the general closure of restaurants, coffee shops and many other dine-in outlets, since the implementation of the MCO.” However, Aranols has pointed that while this was happening Nestle Malaysia saw a strong recovery of export sales, growing at 8.8%, combined with a solid performance in the brand’s core food and beverage business. Nestle Malaysia has continued to ensure a stable and reliable supply of essential products to the stores, with the company’s performance during this quarter supported by the strong sales execution of the Group, alongside the introduction of new products and
BUSINESS FOCUS MAGAZINE | 5
NESTLÉ MALAYSIA
strong marketing campaigns such as the Nestlé Salary For Life Contest, the biggest nationwide contest ever organised by Nestlé Malaysia, offering Malaysians the chance to win a ‘Salary for Life’ of RM3,000 every month. The result is that the company registered a before-tax profit of RM246.3 million for the quarter or RM186.3 million posttax. Nestle Malaysia continues to enjoy solid profit margins despite higher commodity costs and an earlier Chinese New Year.
additional safety protocol adaptations across all sites. The company has made temporary allowances for employees working in factories, distribution centres and sales during Malaysia’s MCO to recognise the additional efforts of those staff in this situation. Nestlé has also allocated funds to provide relief efforts to medical front liners, including a partnership with the
Malaysian Red Crescent Society. Indeed, Nestlé Malaysia has pledged to support over 200,000 Malaysians through immediate COVID-19 pandemic relief efforts, but also by developing programmes that will support the livelihoods of lower-income communities and small enterprises impacted by the crisis. This has included a commitment to
SAFETY FIRST
In the face of COVID-19 Nestle Malaysia has declared safe working conditions of its personnel as the number one priority. This has meant that COVID-19 has resulted in increased operational expenses such as the cost of employees’ PPE as well as
6 | BUSINESS FOCUS MAGAZINE
BUSINESSFOCUSMAGAZINE.COM
NESTLÉ MALAYSIA
“WE ARE CONFIDENT IN MALAYSIA’S POTENTIAL AND CAPABILITY TO SEE ECONOMIC RECOVERY ONCE THE CURRENT COVID19 CRISIS IS BEHIND US, AND WE ARE COMMITTED TO PLAYING OUR PART IN SUPPORTING THE NATION AND EXTENDING A HELPING HAND TO THOSE MALAYSIANS IN NEED DURING THIS DIFFICULT TIME.” invest RM15 million to fund these initiatives under the company’s “Nestlé Cares” umbrella alongside specific initiatives supported by its different brands. As Aranols has pointed out, “Since the very start of the COVID-19 pandemic back in late January, we have proactively adopted preventive actions to protect our people. Throughout the pandemic, we have been working very closely with the authorities and our business partners to safeguard the health of all employees, while ensuring business continuity to meet our obligation towards the nation, as a manufacturer of essential foods and beverages.”
BUSINESSFOCUSMAGAZINE.COM
Whatever happens, Aranols has faith in Malaysia’s ability to come through the crisis stronger. “We are confident in Malaysia’s potential and capability to see economic recovery once the current COVID19 crisis is behind us, and we are committed to playing our part in supporting the nation and extending a helping hand to those Malaysians in need during this difficult time,” he has said. “As Malaysia has just entered a phase of reopening the economy under the CMCO, we want to encourage all Malaysians, starting from all the members of the Nestlé family and our business partners, to follow strictly the Government recommendations so that we all can continue succeeding together in the fight against the pandemic.”
BUSINESS FOCUS MAGAZINE | 7
NESTLÉ MALAYSIA
WWW.NESTLE.COM.MY