Thursday, 19 July 2018

Nestle’s FY18 earnings to grow at steady pace

Nestle’s FY18 earnings to grow at steady pace
February 26, 2018, Monday


KUCHING: Nestle (Malaysia) Bhd’s (Nestle) financial year 2018 (FY18) earnings are projected to grow at a steady pace, while analysts are optimistic on the group’s short to medium term outlook.

Following Nestle’s fourth quarter of 2017 (4Q17) results’ briefing, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) expected a higher revenue growth for FY18 driven by a more aggressive advertising and promotional (A&P) expenses.

“Due to the recent stabilising commodity prices and strengthening ringgit, more spending is expected to be channelled to A&P activities to boost customer purchase,” it said.

MIDF Research also expected that the A&P expenses for FY18 will be significantly higher than FY17. As per Nestle’s filing on Bursa Malaysia, the group recorded a profit after tax and minority interest of RM645.8 million for the 12 months ended December 31, 2017.

“In addition, effective tax rate is expected to be sustained at 21 per cent going forward as most tax incentives such as the Halal tax incentives had been fully claimed.”

All in, the research arm expected that earnings will remain at a steady state of growth in FY18.

Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) highlighted that the brand equity for the Nestle product portfolio continues to be the largest asset for the group.

“This is demonstrated by the group’s ability to register sales growth despite bleak consumer sentiment indicators,it said.

With the turnaround potentially insight, Kenanga Research believed Nestle would be well positioned to enjoy a head start in growth trajectory ahead of their competitors, especially as a market leader in food and beverage (F&B) products.

The research arm also believed that investors may have already bought into the stock in anticipation of the better outlook ahead.

However, with the surge in buying interest in the stock, dividend yields are currently less attractive at 2.4 per cent and 2.9 per cent for FY18 and FY19, respectively. This was down from circa three per cent previously.


http://www.theborneopost.com/2018/02/26/nestles-fy18-earnings-to-grow-at-steady-pace/

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