Nestle Malaysia recently announced its FY2024 full-year financial results, reporting a -11.7% decline year-on-year in turnover to RM6.22bn (US$1.39bn) as well as a -37% decline year-on-year in profits after tax to RM659.9mn (US$147.7mn). Its Q4FY2024 profits after tax also saw a major -72.2% drop year-on-year.
Despite these apparently distressing negative numbers, which the firm has attributed to consumer hesitancy, a drop in purchasing power as well as a high baseline, Nestle Malaysia CEO Juan Aranols has expressed confidence for healthy growth in the coming year.
“We were confronted with a complex and challenging operating environment in 2024, marked by cautious consumer spending and persisting hesitancy towards global brands,” he told FoodNavigator-Asia.
“Nestle Malaysia has sharpened our operational edge throughout 2024 [with initiatives such as] offering the largest set of Healthier Choice certified products, increased digitalisation and upgrading of administrative, commercial and logistic capabilities, as well as launched several innovations throughout the year.
“[With these actions] plus the signs of recovery observed in the consumer sentiment and confidence through the later part of the year, we are confident in achieving a return to healthy growth levels, in line with the historical trajectory consolidated throughout our 112 years of presence in Malaysia,”
The firm also reported that most pressure was felt in terms of domestic sales, but exports had greatly accelerated throughout the year.
“This confirms the competitiveness of Nestlé Malaysia in the international context, benefitting [from] being the largest Halal manufacturing and export hub for the Nestlé Group globally,” he said.
“[We continue] to sustain solid market leadership across [the food sector in Malaysia], and all the efforts of our teams are preparing us well to a return to healthy growth levels in 2025.”
According to the firm’s disclosure submission to the local stock exchange, Bursa Malaysia, domestic sales had contracted by 15.7%, largely impacted by these macroeconomic conditions; whereas export sales had grown by 4.9%.
2024 product innovations highlighted by Aranols included a global new launch of the KITKAT Chocolate Drink; functional launches from its OMEGA and ENERCAL brands under its ‘healthy longevity’ portfolio; as well as new NESCAFÉ and MILO RTD products.
Regional impacts
Consumer hesitancy has been a factor for Nestle not only in Malaysia but also other countries within what Nestle dubs Zone AOA (Asia, Oceania and Africa).
“Consumer hesitancy towards global brands in Zone AOA had a negative impact of 40 basis points on Nestle’s organic growth,” Nestle CFO Anna Manz had told the floor during the global financial results’ release earlier this year.
“All quarters in the year were impacted by this consumer hesitancy and soft consumer demand toward global brands in Zone AOA.
“That said, this zone also delivered positive Real Internal Growth (RIG) of 0.6% amidst these headwinds. We have launched RTD coffee products in some new AOA markets in 2024 [which] are off to a strong start.
“We also see a lot of opportunities for PetCare in Zone AOA, and are making a substantial investment in capabilities, particularly in route-to-market , innovation, and marketing.”
Notably though, the overall organic growth of Zone AOA was 3.4%, meaning that pricing increases still made up 2.8% of the firm’s growth here.
