This article first appeared in The Edge Financial Daily, on October 27, 2015.

KUALA LUMPUR: Unlike its Switzerland-based parent company which is cutting its full-year outlook, Nestlé (Malaysia) Bhd is bullish on its outlook for the fourth quarter ending Dec 31, 2015, on the back of positive consumer sentiments following the announcement of Budget 2016, said its managing director Alois Hofbauer.

Hofbauer also said the company’s sales from markets outside Malaysia only account for about 1% of Nestlé Malaysia’s sales, thus the company will not be impacted by souring, if any, consumer sentiments outside the country.

He was speaking to reporters after launching Nestlé Malaysia’s newest factory in Shah Alam with Sultan Sharafuddin Idris Shah, Sultan of Selangor.

It was reported that the world’s largest food company, Nestlé, has recently cut its full-year growth to around 4.5%, from an initial annual growth target of 5% to 6% growth, due to weak sales in Asia and the Maggi noodle recall incident in India.

Nestlé’s position in major emerging markets has raised concerns as Nestlé’s Asia, Oceania and Africa (AOA) region’s nine-month sales growth fell 3% amid weak sales in Asia.

While analysts are expecting the company’s 4Q performance to be challenged by weak consumer confidence and disposable income, as well as the weaker ringgit, Hofbauer is of the view that the company will be able to pick up from the trend of falling sales, supported by recent measures to reliefs given to the people in the recent budget announcement.

“Middle- and low-income groups have more money to spend after [the] Budget, I see this as very positive [to Nestlé Malaysia].” Hofbauer said, adding that the middle- and low- income groups are the company’s main consumers.

He also said 3QFY15 was a difficult quarter, but the company still managed to deliver strong results.

“When you look at our 3QFY15’s result, you can see that the consumer sentiments were starting to get better, together with strength in the growth of import and export markets.

“Looking ahead, I think it should be quite bullish, but we have to be realistically patient,” said Hofbauer.

Nestlé Malaysia’s net profit rose 19.4% to RM179.16 million in 3QFY15.

On its increasing operating expenses that was pointed out by analysts — Hofbauer said the company is trying to reduce it by continuously improving efficiency.

“We are very cautious with (our) operating costs,” Hofbauer said, adding that they are doing their best to avoid staff retrenchment in the future.

Asked if Nestlé Malaysia would raise the selling price of its products, Hofbauer said that would be the company’s last resort.

“We are going into a difficult 2016, we don’t know where the ringgit is going to go.” he added.

Nestlé Malaysia’s share price dropped 8 sen or 0.1 to close at RM72 yesterday, giving it a market capitalisation of RM16.88 billion.