Nestle Malaysia to spend highest capex in six year, posts resilient FY20
05 May 2020
Nestle (Malaysia) Bhd is setting aside RM280 million capital expenditure this year, its highest in six years, after posting a resilient set of results in its first quarter ended March 31 2020.
Chief executive officer Juan Aranols said the capex would be used to expand Nestlé Malaysia’s current production capacity for MAGGI Noodles.
It is also for a new high technology production line in Shah Alam that will allow the company to enter into new high growth categories with promising future potential.
“Overall, we remain committed to delivering another year of solid and resilient results against a background of uncertainties and external challenges.
“We will also continue to build capabilities for the long-term. This year, we will be allocating the highest capex investment in the last six years, at RM280 million,” Aranols said at Nestlé Malaysia’s first virtual first quarter (Q1) results briefing today.
“We remain fully confident in Malaysia’s potential and we are confident to see a return to economic growth once the current Covid-19 crisis is behind us,” he added.
Nestlé Malaysia’s net profit dropped 20.8 per cent to RM186.31 million in the firest quarter from RM235.22 million a year ago.
This was affected by the Covid-19 pandemic on the local Out-of-Home channels, as well as higher commodity costs and the earlier Chinese New Year timing.
Its revenue eased 1.25 per cent to RM1.43 billion from RM1.45 billion, due to a 3.4 per cent reduction in domestic sales. This was mitigated by a strong growth in export sales of 8.8 per cent.
“The impact on domestic sales is partly due to the anticipated earlier timing of Chinese New Year and the impact of Covid-19 on the Out-of-Home business, following the closure of restaurants, coffee shops and most other dine-in channels. The core food and beverages (F&B) business remained stable during this period,” it said.
Meanwhile, Aranols said the group did not not expect any dividend cut for the year ending December 31 2020.
“Our dividend policy to our shareholders will remain the same this year, of a minimum of 95 per cent of net profit,” he added.