NESTLE SETS ASIDE RM220M CAPEX
Expansion and upgrade of its 7 facilities nationwide will help boost production
NESTLE Malaysia Bhd, a multinational food and drink company, has allocated RM220 million in capital expenditure (capex) this year to expand and upgrade its facilities nationwide.
This includes RM100 million for the expansion of Milo production capacity at its factory in Chembong, Negri Sembilan.
Chief executive officer Juan Aranols said the Chembong plant expansion would enable the company to establish the world’s largest Milo Manufacturing Centre of Excellence.
“The remaining RM120 million (capex) would be utilised for our other factories throughout the country to keep them up and running efficiently and to increase productivity,” he said after the company’s shareholders meeting, here, yesterday.
Nestle has seven factories in Malaysia, including the Chembong plant, which makes Milo, Kitkat and ice cream products.
Aranols said the increased capex would further support the company’s focus to leverage new opportunities for its products.
Last year, Nestle allocated RM147 million in capex.
“The continued investment commitment would deliver a steady stream of innovations and constantly drive efficiencies, enabling us to sustain our competitive edge and accelerate growth,” he added.
Aranols said Nestle was confident of continuing to generate healthy, profitable and sustainable growth this year despite a challenging consumer market, especially in the food and beverage segment.
“Consumer climate seems volatile this year and is likely less positive for local demand. However, Nestle’s products have strong uptakes and we will continue capturing this opportunity.”
He also said increasing product prices would be the last resort for Nestle, citing that it was important for the company to find savings to compensate such move.
“The savings are important for our consumers, especially on products that are essential to the B40 (Bottom 40 per cent income) group.
“If there is any price increase, it will be very moderate and probably not (include) products for the B40 group,” he said.
Aranols said Nestle would take proactive measures to manage volatility in raw material prices by hedging accordingly.
“Our proactive cost management and improvement in internal operational efficiencies would continue to drive our profitability this year and offset tension in commodity markets.”
Nestle Malaysia’s net profit in the first quarter ended March 31 this year rose 1.7 per cent to RM235.22 million from RM231.22 million in the same period last year due to lower operating expenses.
Revenue increased 1.6 per cent to RM1.45 billion from RM1.43 billion a year earlier.
“We are optimistic of sustaining this momentum, given the robust plans we have in place to deliver sustainable and profitable growth.
“Our strategy focuses on creating a virtuous circle to drive efficiencies, and the related savings are invested to generate greater demand and consumer relevant innovations, which will deliver incremental growth this year,” added Aranols.