~A~ 1 2 JAN

Nestle upbeat on
growth opportunities
Innovation, renovation and product improvement to boost topline
By M. HAFIDZ MAHPAR 'The key focus for this year would
[email protected],my be on utilising the new capacity
rather than further expansion." he
PETALING JAVA: Nestle (M) Bhd, ~ said, adding that some of the invest-
one of the country's biggest food . ments came on stream only in the
manufacturers, sees good opportu- last few months or would come on
nities for growth this year, said man- stream in the coming months.
aging direc;tor Peter R Vogt . The two major capacity increases
"We have a number of activities in are in coffee and non-dairy creamer
the pipeline in terms of innovation, production. Last year Nestle invested
renovation and further improve- RM110mil to upgrade its existing
ment of products to make sure we facilities in Shah Alam to almost
have top line growth," he told StarBiz double its regional soluble coffee
in an intelView. production capacity. Earlier, at the
"At the same time, we have activi- end of 2008, it opened a RM75mii
ties and initiatives internally to regional non-dairy creamer plant,
red uce cost - to be more cost-effi- also in Shah Alam.
cient - and to absorb some oflhe On market share, Vogt said last
cost increases that are coming from year the company managed to either
the outside." maintain or grow its share in almost
For example, he said, Nestl~ Peter R. Vogt ... 'We fully agree with the Government's policy to reduce all product categories it was in.
would absorb the higher sugar cost and over time abolish this (sugar) subsidy.' ·It was reported last month that
follOWing the subsidy reduction. Unilever suspended palm oil pur-
"We fully agree with the "The good thing is, you could very cautious in t'heir spending." chases from Sinar Mas Group of
Government's policy to reduce and already see in the fourth quarter On Nestle's biggest challenge for Indonesia as the latter was said to
over time abolish this subsidy. If it's (Q4) more positive signs in terms of 2010, Vogt cited the increase in com- contribute to deforestation.
done in a phased manner, we should improvement in consumer demand modity prices, particularly cocoa and Asked Nestle'S stand on environ-
be able to absorb the cost." and overseas economies. So gener- milk. "J think we will have no choice mental sustainability in the palm oil
Vogt declined to give estimates of ally, we are positive about 2010," but to make certain (price) adjust- industry, he said Nestle, which is a
Nestle's growth for the full financial .said Vogt. ments. We tIY to absorb as much cost member of the Roundtable on
year ending Dec 31. 2009. His comment on positive signs in as possible, but there are limits, espe- Sustainable Palm Oil, was committed
For the nine months ended Sept Q4 contrasts to Nestle's remarks cially if we have these dramatic to using only certified palm oil by
3D, 2009, the company reported a when reviewing its performance for increases." 2015. "But before then, because there
3.8% drop in revenue to RM2.79bil Q32009. He declined to say hownluch isn't enough certified palm oil avail-
against the_same period in 2008. but In a filing with Bursa Malaysia. the Nestle had allocated for capital able, we would still have to buy from
net profit rose by 0.7% to RM265.6mil. company had said: "The domestic expenditure this year, but said that other reputed companies. There will
For the third quarter (Q3), net profit market -recovery was below our the company had invested more be a gradual change-over because
fell 8.8% year-on-year.to RM79.76mil expectation (in Q3). The negative fhan RM500mii over the last three the industIY also needs to adapt," he
on the back of7.8% lower revenue of economic sentiment was quite sig- years for expanding capacity and said, adding that Nestle was a rela-
RM886.8mil: nificant, driving consumers to be upgrading quality. tively small buyer of palm oil