Financial Investment and Planing for Nestle

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Executive Summary

Nestle (Malaysia) is providing goods with the aiming to serve foods and beverages of Nutrition, Health and Wellness to Malaysian. Nowadays, people are getting cautious and conscious with the health problem. They will be more aware with their diet and consumption. Due to this, indirectly the overall demand of Nestle will increase. Beside, food retail chains and disposable income is growing as days passed and this will eventually cause the variety for dairy product wider. This allowed more options given to the potential consumers and increase the overall performance of Nestle.

This company’s profit had affected by the economy analysis and industry analysis. Economy analysis had analysed how the world economy will affected business of the company and the industry analysis is deals with the competitors of the company. However, two of this problem has not affected too much on the profit of this company. We can see from the fundamental analysis that Nestle had made a profit in year 2009. Nestle (Malaysia) has achieved a turnover by 4.30% to RM 3.3 billion when compare with previous year, year 2008.

The fundamental analysis include short-term and long-term ratio. In this report, we had 7 different ratios and analysis .We had calculated 3 ratio and analysis under short-term and 4 ratio and analysis under long term. Under short-term analysis we calculate liquidity ratio, profitability ratio, and activity ratio. However, under long-term ratio we had calculated and analysis the ratios of earning per share, per share ratio, and dividend payout ratio.

TABLE OF CONTENT

Page

1.0 Introduction 1 2.0Nestle Company Profile 2

3.0 “Top- Down” Approach to Security analysis 3 3.1 Economy Analysis 4 3.2 Industry Analysis 5 3.3 Fundamental Analysis 3.3.1 Short - Term 7 3.3.2 Long – Term 10

4.0 Conclusion and Recommendation 13

5.0 References 14

1.0 INTRODUCTION

Nestlé’s policy is to maintain a successful long-term business development. This report is to provide an analysis of Nestlé’s financial position by analysing the information contained within the annual reports for the last 3 years which is from 2007 to 2009. The report will cover the fundamental analysis of the company which includes short term and long term. For short term analysis is liquidity ratios, profitability ratios, and per share ratios. Moreover, for long term analysis there is earnings per share (EPS), zero growth model and P/E approach.

For the financial report and the analysis of the newspaper report, we can clearly know that Nestle (Malaysia) has achieved a turnover by 4.3% to RM 3.4 billion, from RM 3.3 billion in 2008. This is due to the high and strong demand from domestic as well as from the export markets where most of the business unit operating under Nestle (M) Berhad such as Food, Nutrition, Confectionary, Liquid Drinks, Ice-Cream and Chilled Dairy are showing a stable growth over the year. The company has lower profit margin in 2009 because the sales are...
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