Annual Report On Nestles Compeny

Annual report on Nestles Compeny 2020

Introduction : Nestlé in Pakistan is operating since 1988 under a joint venture with

Milk Pak ltd and took over management in 1992. ... Nestlé Pakistan also prides itself in being

the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the

first infant food, nutrition has been in our DNA.

Facts and figures:

We at Nestlé touch billions of lives worldwide; from the farmers we work with to the individuals and
families who enjoy our products, the communities where we live and work, and the natural environment
upon which we all depend.

At Nestlé Pakistan, the global ideology of Nutrition, Health and Wellness is inspired by the scientific
breakthrough of our founder, Henri Nestlé and ever since it runs in our DNA ever since. Guided by our
values and with nutrition at our core, we enhance quality of life and contribute to a healthier future. We
are the leading Food & Beverages Company in Pakistan, reaching out to the remotest areas, offering
products and services for all stages of life, every moment of the day.

Nestlé Pakistan is headquartered in Lahore, with four production facilities across the country. Factories in
Sheikhupura and Kabirwala are multi-product, whereas the ones in Islamabad and Karachi are water
factories.

Letter to our shareholder :

Nestlé is the Good food, Good life company. We believe in the power of food to enhance quality of life.
We constantly explore and aim to push the boundaries of what is possible with food, beverage and
nutritional health solutions to contribute to a healthier future. We focus on making a difference to the lives
of people and pets, on protecting and enhancing the environment, and on generating value for our
shareholders and other stakeholders alike.

Demonstrating dependability and agility

2020 was a challenging year. COVID-19 severely impacted every aspect of our lives and created
much uncertainty. At Nestlé, we responded immediately and with clear priorities by putting
measures in place to keep our employees safe; by ensuring supply of essential food and
beverages to consumers; by caring for our communities and providing financial and in-kind
support to our business partners.

While the COVID-19 crisis has caused volatility, we made further progress on our value creation
model based on a balanced pursuit of top-line and bottom-line growth with capital efficiency.
Highlights include:

 Organic growth reached 3.6%, with real internal growth of 3.2% and pricing of 0.4%. Growth
was supported by strong momentum in the Americas, Purina PetCare and Nestlé Health Science.
 Foreign exchange reduced sales by 7.9% due to the continued appreciation of the Swiss franc
against most currencies. Divestures had a negative impact of 4.6%. As a result, total reported
sales decreased by 8.9% to CHF 84.3 billion (2019: CHF 92.6 billion).
 Underlying trading operating profit (UTOP) margin reached 17.7%, up 10 basis points on a
reported basis and up 20 basis points in constant currency. The trading operating profit (TOP)
margin increased by 210 basis points to 16.9% on a reported basis.
 Underlying earnings per share increased by 3.5% in constant currency and decreased by 4.5%
on a reported basis to CHF 4.21. Earnings per share stayed unchanged at CHF 4.30 on a reported
basis.
 Free cash flow reached CHF 10.2 billion, accounting for 12.1% of sales.

Our results demonstrate the consistency and dependability of our company. Our resilience is based on the

,
agility of our business and the strength of our diversified portfolio across geographies product
categories and channels. Our decentralized model enables our local teams to make quick decisions, act

autonomously and respond with speed to rapid shifts in consumer needs and customer demands .
Pursuing our value-creation strategy
We aim to offer a portfolio of products and services that evolve with consumer demands. We strive to
create products that are right for consumers and that contribute to public health and a sound environment.
It's good business. This guides the choices we make today and shapes our portfolio for tomorrow –
whether through product evolution, innovation, acquisition or partnership .
Our strategy: The choices we make
We focus our energy and resources where unlocking the power of food can make the greatest
difference to the lives of people and pets, protect and enhance the environment and generate
significant value for our shareholders and other stakeholders alike. This is why we:

 Apply our expertise in nutrition, health and wellness - developed over more than 150 years - to
help people, families and pets live happier, healthier lives.
 Meet the needs of the modern consumer with healthy, delicious, convenient products for
conscious, time-constrained lifestyles.
 Bring affordable, safe and high-quality nutrition everywhere to everyone, regardless of their
income level.
 Bring distinctive, premium innovations to market fueled by creative exploration, consumer
insights, pioneering nutrition science and culinary excellence.
 Advance our sustainability agenda to enhance the health of the planet, drive societal progress and
support a sustainable food system, particularly in terms of:
 Packaging and delivering our products in ways that are safe and protect the environment.
 Offering more plant-based food and beverage options to enable us to be the consumers'
preferred choice as they diversify their diets.

Our value creation model

Our long-term value creation model is based on the balanced pursuit of resource efficient top-
and bottom-line growth as well as improved capital efficiency. We create value by:

 Fueling growth through continuous innovation.

 Improving operational efficiency.
 Allocating our resources and capital with discipline and clear priorities, including through
acquisitions and divestitures.
 

Business Performance Review:

During the period, the company recorded a revenue of PKR 29.8 billion, an increase of 2.6% compared
to same period despite many difficulties emanating from COVID-19 crisis. Impulse products such as
juices and water as well as products for out-of-home channel were severely impacted by the lockdown.
In addition, Afghanistan border closure had a major impact on the exports. Net profit for the same
period has declined mainly due to higher financing cost and currency devaluation impact. The financial
performance for the three months period is summarized below:
 Jan – Mar 2020 PKR Jan – Mar 2019 PKR
Million Million
Change
Sales 29,883 29,136 +2.6%
Gross Profit 8,840 8,770 +0.8%
% of sales 29.6% 30.1%
Operating Profit 4,054 4,027 +0.7%
% of sales 13.6% 13.8%
Net Profit after tax 1,939 2,274 -14.7%
% of sales 6.5% 7.8%

Future Outlook:

In view of the very exceptional situation caused by COVID-19, we will continue to prioritize health and
wellbeing of our employees, business continuity and supporting communities with our relief efforts. The
management remains fully committed to manage the ongoing challenges and will make all out efforts to
deliver promise of providing nutrition, health and wellness to consumers in these testing times and
ensure sustainable business growth.

Samer Chedid Chief Executive Director Lahore