KUALA LUMPUR (May 5): Nestle (Malaysia) Bhd is maintaining its dividend policy amid the current challenging business environment.

“We don’t anticipate [a dividend cut], our dividend policy is paying at least 95% of net profit. We’re looking to deliver a year of solid and resilient results,” said its chief executive officer Juan Aranols at a media briefing today in conjunction with the release of its first-quarter results.

For its financial year ended Dec 31, 2018 (FY18), it declared total dividends of RM2.80 per share.

Nestle’s net profit for the first quarter ended March 31, 2020 fell 20.8% year-on-year to RM186.31 million, from RM235.22 million previously while revenue fell 1.2% to RM1.43 billion. 

Aranols believes the setback arising from Covid-19 containment measures is temporary and that it could see recovery soon. Malaysia’s Movement Control Order, in place from March 18 to May 3, has impacted Nestle’s out-of-home channels, with 78% of its customers in this segment, comprising restaurants, coffee shops and dine-in outlets, closed.

“We’re confident that we are able to generate momentum for our plants,” he said.

Nonetheless, Nestle is planning to launch around 20 new products this year with a focus on high demand products.

While there will be no cut in product prices, Aranols stressed that the company will continue to provide good value to its customers.

Nestle is also committed to investing in Malaysia with an allocation of RM280 million in capital expenditure, the highest in the past six years.

The fund will be used to increase production capacity for Maggi noodles as well as a new high-technology production line in Shah Alam that will allow the company to enter into new growth categories with great future potential.

Meanwhile, chief financial officer Craig Connolly said the company has no plans for fund raising.

“No, we’re not (going to the market to raise funds). We have forecast our budget properly for the future.

“The essentials for us have been planned ahead. In February, we were planning ahead and to ensure supply,” Connolly said.