Positive push: Format and flavour innovation drives Nestle Malaysia Q2 back to profitability

By Pearly Neo

- Last updated on GMT

Nestle Malaysia says extensive format and flavour innovations in its product development have helped d drive healthy Q2FY2023 business growth. ©Nestle
Nestle Malaysia says extensive format and flavour innovations in its product development have helped d drive healthy Q2FY2023 business growth. ©Nestle

Related tags Nestlé Malaysia

Nestle Malaysia says extensive format and flavour innovations in its product development have helped d drive healthy Q2FY2023 business growth, giving the firm renewed confidence in its ability to secure a profitable rest of the year.

The firm recently released its Q2FY2023 financial results, revealing a 6.8% growth year-on-year to RM1.75bn (US$) in revenue as well as a 6.6% growth year-on-year to RM180.9mn (US$) in profits after tax.

This can be considered a strong performance for the country amidst ongoing economic challenges ranging inflationary price hikes on various major food ingredients to declining Malaysian Ringgit currency exchange rates.

It is also quite the achievement compared to Q1FY2023 results released earlier this year​, where the firm’s profitability took a -3.9% hit - and has thus given the firm renewed confidence in being able to deliver positive growth this year.

““While multiple factors of uncertainty remain, especially those derived from a weakened Ringgit and the ongoing volatility in commodity and energy markets, we remain confident in our ability to deliver another year of solid sales growth [and] resilient profitability,”​ Nestle Malaysia CEO Juan Aranols said when delivering the latest results.

“In addition to solid commercial and financial performance, we will continue driving and advancing our ESG agenda in its different fronts, including reforestation, packaging sustainability and progressive decarbonization of our operations.

“Another important milestone we have seen was the renewal of MILO’s sponsorship agreement with the Olympic Council of Malaysia until 2028, [such that we will] continue providing support for Malaysian athletes, starting with the Olympic and Paralympic Games 2024, amongst others.”

Nestle Malaysia’s growth in this quarter was strongly underpinned by the launch of many new product innovations from both format and flavour perspectives, and Aranols added that this would continue to be a key company growth strategy moving forward.

“Our growth strategy remains anchored on delivering high-quality, great-tasting and nutritious products that meet the expectations of Malaysian [consumers],”​ he said.

“[There are many] diverse and evolving preferences across multiple consumer segments in this market, and these solid results continue to reflect the relevance of [Nestle] brands and product offerings here.

“Not only have our core products continued to perform very well, we have also brought to market further relevant product innovations that received positive consumer response.”

The firm’s new product launches in this three-month period were particularly extensive and wide-ranging, covering various categories from MAGGI instant noodles to NESCAFE coffee products.

“MAGGI Noodles added the [spicy] MAGGI Mi Goreng Laksa Warisan and MAGGI Pedas Giler Cheezy Berapi flavours, and the Lively Tea range added a refreshing lemon tea variety as well,”​ he said.

“[In terms of format innovation], our Harvest Gourmet plant-based range introduced Crispy Fish-Free Fingers, NESCAFE launched 2-in-1 cold coffee mixes that can be made using just cold milk and ice, and new formats have been added to the KIT KAT range.

“We will [continue to] deliver high-quality, nutritious and great-tasting products that cater to the diverse needs and expectations of Malaysian consumers [moving forward].”

Global positivity

Nestle Malaysia’s positive sentiments were reflective of its headquarters in Switzerland, which almost simultaneously also released the firm’s overall Q2FY2023 financial results.

Nestle CEO Mark Schneider told the floor during the firm’s latest investors conference call that growth is likely to be more forthcoming in the rest of the year with consumption in several categories having normalised.

“At-home consumption post-COVID has now normalized, removing a growth drag that remained on some of our categories,”​ he stated.

“Out-of-home channels continue to see strong growth momentum [that developed after the pandemic], and based on this strong performance in the first half of the year we now upgrade our organic sales growth outlook for 2023 from 7% to 8%.”

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