Latest news with #Nestle(M)Bhd
The Star
3 days ago
- Business
- The Star
Recovery in sales volume to propel Nestle
PETALING JAYA: Nestle (M) Bhd is poised for a stronger second half of 2025 (2H25), underpinned by easing raw material prices, stable margins and a steady recovery in sales volume, following a challenging year marked by cost pressures and boycott-related disruptions. According to Maybank Investment Bank (IB) Research, Nestle's sales volume has shown progressive recovery in 1H25 and this remains its key focus in 2H25. The research house raised its 2025 to 2027 earnings forecasts by up to 22%, citing 'a clearer route to recovery in relation to its brand image and cost pressures from raw materials.' Maybank IB Research said that Nestle's second-quarter revenue rose 10% year-on-year (y-o-y), driven by price hikes and systematic sales volume recovery. It added that 'the group is on a stronger footing to enhance market competitiveness and rebuild market share across its product categories'. Meanwhile, CGS International Research remained cautious, citing stretched valuations. 'We believe valuations are rich at 35.8 times 2025 price-earnings ratio with a 2.4% 2025 dividend yield,' the research house said, maintaining a 'reduce' call with a target price of RM78. It acknowledged a volume recovery in 2Q25 following the easing of boycotts and noted that 'export revenue growth was helped by growing demand for halal products in both existing and new markets'. It added that management saw stability in margins supported by 'ongoing hedging efforts, and recent easing in cocoa and coffee prices'. Hong Leong Investment Bank (HLIB) Research pointed to a mixed outlook, with operational efforts offsetting persistent external challenges. 'The group continues to navigate rising commodity costs through a steadfast focus on operational efficiency, cost savings initiatives, and greater digitalisation,' it said. Despite selective price increases, HLIB Research cautioned that 'the ongoing boycott against Western-affiliated brands continued to dampen demand' and is unlikely to fully revert soon. Nonetheless, the the research house highlighted that product innovation remained a bright spot, with launches such as Nescafe Coffee Concentrate and Kit Kat 3-in-1 reinforcing the group's pivot toward health-focused and convenience-led offerings. HLIB Research reiterated its 'hold' rating with an unchanged target price of RM80. CIMB Research also held a steady view, with no changes to its forecasts or 'hold' rating. It noted that 'Nestle does not intend to implement major selling price adjustments, opting instead to focus on maintaining affordability in view of the current subdued consumer spending environment.' The research house underscored Nestle's long-term growth strategy centred on innovation, including the 'world's first drinkable KitKat' as aligned with global priorities. 'Gross profit margins are expected to remain stable in 2H25,' it added, citing digitalisation and efficiency initiatives as cushions against cost pressures. TA Research struck an optimistic tone, raising its earnings forecasts by up to 7.6% and its target price to RM102.80. It attributed the gains to higher sales assumptions and robust brand investments. 'Operating expenses rose 4% y-o-y mainly attributed to higher marketing investments,' the research house noted, pointing to promotional campaigns tied to new launches and Milo's 75th anniversary. It said the efforts are supportive of top line growth, with the potential to strengthen brand equity, enhance customer loyalty, and reinforce Nestle's market leadership.
The Star
4 days ago
- Business
- The Star
Nestle's outlook brightens with wage growth, govt support measures
PETALING JAYA: Things are starting to look up for Nestle (M) Bhd , the purveyor of Milo chocolate malt drinks and Maggi noodles, as lower commodity prices, a combination of wage growth and government support measures and the decline of boycotts drove earnings in the second quarter ended June 30, 2025 (2Q25). While analysts remain cautious of the company's outlook, CIMB Research, which has maintained a 'hold' call on the stock with a target price (TP) of RM86.20, expects gradual demand recovery as consumer sentiment normalises amid fading boycott impact as well as likely improvements in exports leveraging on its place as Nestle SA's global halal hub. It believes the share valuation of 35.9 times financial year ending Dec 31, 2025 (FY25) price-to-earnings (PE) has priced in the weak near-term outlook, driven by lower sales volume assumptions amid prevailing soft consumer sentiment and global uncertainties, noting the inelastic demand for its largely consumer staple product offerings, strong brand equity, and diversified product portfolio across key food categories. Affin Hwang Research noted that the 2Q25 financial performance signals that the worst could probably be over, with the boycott pressures easing meaningfully, and has upgraded the stock to a 'buy' call and a TP of RM95 from RM85, implying 42 times PE. A stronger ringgit together with easing commodity prices may help lift the company's margins in the coming quarters. It pointed out that the RM100 credit given through the MyKad to all Malaysians aged 18 and above would also support higher sales in the second half of the year, as many Nestle products comes under the MySara programme. RHB Research said revenue growth, which returned in 2Q25, could be sustainable premised on the company's effective marketing engagements to stimulate consumer spending and the normalising sentiment on its brands. It has upgraded the stock to a 'buy' call from 'neutral' and raised the TP to RM95 from RM77 as the research house thinks that the comeback 'is timely in view of the pick-up in investor appetite for defensive stocks amidst uncertain market conditions.' 'We also expect a margin recovery ahead, on easing commodity prices. 'Post results, we raise FY25 to FY27 earnings by 8%, 7%, 3% after imputing higher sales growth and gross profit margin assumptions,' it said. UOB Kay Hian Research, which has maintained a 'hold' recommendation but with a higher TP of RM82 from RM76, said earnings for FY25 and FY26 has been lifted by 5.6% and 5.2% respectively to factor in higher sales and margin assumptions. 'Nestle had undertaken a price exercise adjustment in July 24 for certain products by 5% to 6% that appears to have largely protected its margins against higher input cost. 'Coupled with its hedging, margins should sustain over the near term,' it added.
The Star
24-07-2025
- Business
- The Star
Nestle confident of profit upswing in 2H25
Nestle (M) Bhd chief executive officer Juan Aranols. PETALING JAYA: Nestle (M) Bhd , which recorded earnings growth in the second quarter of financial year ended June 30, 2025 (2Q25), remains upbeat on its outlook for the second half of financial year 2025 (2H25), supported by sustained brand strength, digitalisation and cost optimisation to drive profit recovery despite ongoing market headwinds. Chief executive officer Juan Aranols said the company is confident that these efforts will continue to underpin growth and support recovery in the months ahead. 'As we navigate through 2H25, we remain confident in our ability to drive solid growth momentum and profit recovery through the coming quarters,' he noted in a statement. He said while the company remains 'mindful and vigilant of the geopolitical uncertainties that may impact the business environment in Malaysia,' it is well-positioned to stay resilient by accelerating digitalisation and boosting efficiencies to fund brand investments and innovation. 'We will further accelerate our journey through rapid digitalisation and pursuing efficiencies that fuel brand investments and innovations to strengthen market leadership,' he said. For 2Q25, Nestle's revenue rose 9.5% year-on-year to RM1.67bil from RM1.52bil, while net profit surged 19.8% to RM112.11mil from RM93.6mil. The growth was underpinned by broad-based brand performance and continued momentum from festive campaigns in the previous quarter. 'Alongside domestic sales, the company's export business also accelerated, confirming Nestle's international competitiveness while continuing to leverage its role as the largest halal manufacturing hub for the Nestle group worldwide,' the statement noted. For 1H25, revenue rose 4% to RM3.44bil from RM3.31bil in the same period last year, although net profit dipped 5.4% to RM273.45mil from RM289.11mil. Nestle attributed its performance to margin management amid persistent volatility in commodity prices, 'through the systematic application of the Nestle Virtuous Circle framework.' 'This approach emphasises a relentless focus on efficiency and cost optimisation to fund brand investments that drive growth and market share gains,' it noted. 'The profit improvement also reflects solid top-line recovery, supported by a prudent approach to pricing amid cost increases,' the company said. Aranols said the 2Q25 results validated the group's earlier guidance of returning to healthy growth in the 1H25. 'Amid market volatility and intense competition, we continued to drive strong brand plans with effective execution across all sales channels,' he added. Nestle declared a first interim dividend of 70 sen per share during the quarter – unchanged from a year ago. Throughout the quarter, the company maintained its focus on the key drivers of consumer preference for its brands and product offerings – particularly quality, taste and nutritional relevance. 'In combination with its wide distribution network and best-in-class commercial execution, the company's core products performed well, complemented by product innovations that have been positively received by consumers, helping to sustain market leadership positions,' it added. Nestle's shares closed 7% higher yesterday, up RM5.42 to RM82.32.
New Straits Times
24-07-2025
- Business
- New Straits Times
Analysts flag Nestle, F&N, Farm Fresh, Mr DIY as stimulus winners
KUALA LUMPUR: The recently announced government stimulus is expected to provide a modest boost to Malaysia's consumer sector by supporting short-term spending, particularly on essential items and value-focused retail. CIMB Securities said food and beverage (F&B) producers like Nestle (M) Bhd, Fraser & Neave Holdings Bhd, QL Resources Bhd, and Farm Fresh Bhd are likely to benefit from increased demand for staple F&B products, many of which may be eligible for purchase using the RM100 credit. "Other retailers such as Mr DIY Group (M) Bhd, Padini Holdings Bhd, Aeon Co (M) Bhd, Yoong Onn Corporation Bhd, Bonia Corporation Bhd, Berjaya Food Bhd, and 7-Eleven Malaysia Holdings Bhd, could see improved footfall and higher spending per customer as disposable incomes increase, amplified by the recent 25 basis point overnight policy rate cut to 2.75 per cent," it said. CIMB Securities said that within the consumer sector, it remains in favour of companies that benefit from the steady demand for everyday essentials and are well-positioned to tap into consumer downtrading by targeting the mass-market segment. It expressed a positive view on the consumer sector following Prime Minister Datuk Seri Anwar Ibrahim's recent announcement of new fiscal support measures. However, the research house is maintaining its current earnings forecasts, noting that the fiscal measures are already in line with its existing revenue growth assumptions for the companies under its coverage. It reiterated a "Neutral" stance on the sector, which is trading at 27.2 times one-year forward price to earnings ratio, slightly more than one standard deviation below its five-year average of 29.1 times. CIMB Securities said current valuations appear reasonable, given the backdrop of subdued consumer sentiment, higher sales tax on discretionary goods, ongoing boycott-driven impact on certain companies such as Nestle (M) and Berjaya Food, as well as cost pressures from the widened Sales and Service Tax on rental expenses.
