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Nestle Malaysia’s marketing investment and innovation pay off

Nestlé Malaysia delivered positive top line results in the second quarter ending 30 June 2019 on the back of sustained consumer demand, supported through “strong innovations and marketing investments”. According to press release, domestic business grew by 4.5%, an increase of 3.4% from the previous year, after factoring in divestment of its chilled dairy business in January.

Overall, Nestlé Malaysia also saw a higher turnover of RM1.34 billion, 2% higher than the same period last year, despite weathering some cost and currency headwinds. However, there is a “slight dilution” in the group’s profit after tax (RM156.9 million) due to a planned increase in marketing investment, as well as some unfavourable net impact from exchange rates and commodity prices.

Nestlé Malaysia CEO Juan Aranols explained: “The quarterly profitability, whilst remaining strong, has been impacted by the phasing of our marketing spending as well as some one-off warehousing expenses in preparation for the factory expansion in Chembong.”

However, he said the growth momentum acceleration in the second quarter demonstrates the strength of its domestic business and the strong sustained demand for its brands. They were driven by “focused sales execution, attractive innovations, increased marketing support and efforts to capture opportunities during the festive season”.

On the innovation and new product development front, Nestlé Malaysia launched new propositions for NESCAFÉ GOLD, MAGGI Pedas Giler Seafood, MAGGI Pedas Giler 2X Ayam Bakar and LA CREMERIA Summer Berries Yogurt in the second quarter. According to Aranols, there will be another “exciting stream of new product launches” in the second half of the year. This includes its most recent introduction of the STARBUCKS At Home range, building on Nestlé’s Global Coffee Alliance with STARBUCKS.

Despite a backdrop of global uncertainties and volatility, he remains confident of the company’s full year performance. “We will continue to proactively capture efficiencies and savings to invest behind our brands and protect our margins as the best way to counter rising commodity costs and protect the accessibility to our brands by consumers,” he added.

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