NESTLE 2017-18 Annual Report Analysis

Mon, 25 Mar

NESTLE has announced its results for the year ended December 2018. Let us have
a look at the detailed performance review of the company during FY17-18.
NESTLE Income Statement Analysis
 Operating income during the year rose 12.8% on a year-on-year (YoY)
basis.
 The company's operating profit increased by 24.9% YoY during the fiscal.
Operating profit margins witnessed a fall and down at 23.2% in CY18 as
against 20.9% in CY17.
 Depreciation charges decreased by 1.9% and finance costs increased by
21.8% YoY, respectively.
 Other income grew by 46.3% YoY.
 Net profit for the year grew by 31.2% YoY.
 Net profit margins during the year grew from 12.0% in CY17 to 13.9% in
CY18.

NESTLE Income Statement 2017-18

No. of Mths Year Ending 12 Dec-17* 12 Dec-18* % Change
Net Sales Rs m 100,096 112,923 12.8%
Other income Rs m 1,769 2,589 46.3%
Total Revenues Rs m 101,865 115,512 13.4%
Gross profit Rs m 20,965 26,177 24.9%
Depreciation Rs m 3,423 3,357 -1.9%
Interest Rs m 919 1,120 21.8%
Profit before tax Rs m 18,393 24,290 32.1%
Tax Rs m 6,141 8,220 33.9%
Profit after tax Rs m 12,252 16,069 31.2%
Gross profit margin % 20.9 23.2
Effective tax rate % 33.4 33.8
Net profit margin % 12.0 13.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster
NESTLE Balance Sheet Analysis
 The company's current liabilities during CY18 stood at Rs 19 billion as
compared to Rs 15 billion in CY17, thereby witnessing an increase of 24.3%.
 Long-term debt down at Rs 351 million as compared to Rs 351 million
during CY17, a fall of 0.0%.
 Current assets rose 20% and stood at Rs 47 billion, while fixed assets fell
8% and stood at Rs 25 billion in CY18.
 Overall, the total assets and liabilities for CY18 stood at Rs 81 billion as
against Rs 74 billion during CY17, thereby witnessing a growth of 10%.

NESTLE Balance Sheet as on December 2018

No. of Mths Year Ending 12 Dec-17* 12 Dec-18* % Change
Networth Rs m 34,206 36,737 7.4
 
Current Liabilities Rs m 14,927 18,550 24.3
Long-term Debt Rs m 351 351 0.0
Total Liabilities Rs m 73,626 80,881 9.9
 
Current assets Rs m 39,374 47,370 20.3
Fixed Assets Rs m 27,103 25,058 -7.5
Total Assets Rs m 73,626 80,881 9.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster

NESTLE Cash Flow Statement Analysis

 NESTLE's cash flow from operating activities (CFO) during CY18 stood at
Rs 21 billion, an improvement of 12.9% on a YoY basis.
 Cash flow from investing activities (CFI) during CY18 stood at Rs -524
million on a YoY basis.
 Cash flow from financial activities (CFF) during CY18 stood at Rs -13 billion
on a YoY basis.
 Overall, net cash flows for the company during CY18 stood at Rs 7 billion
from the Rs 7 billion net cash flows seen during CY17.

NESTLE Cash Flow Statement 2017-18

Particulars No. of 12 12 %
 months
Dec- Change
Year Ending Dec-18
17
Cash Flow from Operating 18,17
Rs m 20,525 12.9%
Activities 8
Cash Flow from Investing
Rs m -1,306 -524 -
Activities
Cash Flow from Financing -
Rs m -9,966 -
Activities 13,174
Net Cash Flow Rs m 6,906 6,826 -1.2%
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster

Current Valuations for NESTLE

 The trailing twelve-month earnings per share (EPS) of the company stands
at Rs 166.7, an improvement from the EPS of Rs 127.1 recorded last year.
 The price to earnings (P/E) ratio, at the current price of Rs 10,511.6, stands
at 63.1 times its trailing twelve months earnings.
 The price to book value (P/BV) ratio at current price levels stands at 24.4
times, while the price to sales ratio stands at 7.9 times.
 The company's price to cash flow (P/CF) ratio stood at 52.2 times its end-
of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Dec-17* 12 Dec-18*
Sales per share (Unadj.) Rs 1,038.1 1,171.2
TTM Earnings per share Rs 127.1 166.7
Diluted earnings per share Rs 127.1 166.7
Price to Cash Flow x 64.7 52.2
TTM P/E ratio x 63.1 63.1
Price / Book Value ratio x 19.5 24.4
Market Cap Rs m 1,013,528 1,013,528
Dividends per share (Unadj.) Rs 86.0 115.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster
 Ratio Analysis for NESTLE
 Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.6x during
CY18, from 2.6x during CY17. The current ratio measures the company's ability to
pay short-term and long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and stood
at 22.7x during CY18, from 21.0x during CY17. The interest coverage ratio of a
company states how easily a company can pay its interest expense on outstanding
debt. A higher ratio is preferable.
 Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 43.7%
during CY18, from 35.8% during CY18. The ROE measures the ability of a firm to
generate profits from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company improved and
stood at 68.5% during CY18, from 55.9% during CY17. The ROCE measures the
ability of a firm to generate profits from its total capital (shareholder capital plus debt
capital) employed in the company.
Return on Assets (ROA): The ROA of the company improved and stood at 21.3%
during CY18, from 17.9% during CY17. The ROA measures how efficiently the
company uses its assets to generate earnings.
Key Ratio Analysis
No. of Mths Year Ending 12 Dec-17* 12 Dec-18*
Current ratio x 2.6 2.6
Debtors’ Days Days 3 4
Interest coverage x 21.0 22.7
Debt to equity ratio x 0.0 0.0
Return on assets % 17.9 21.3
Return on equity % 35.8 43.7
Return on capital employed % 55.9 68.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster

To see how NESTLE has performed over the last 5 years, please visit here.
NESTLE Share Price Performance

Over the last one year, NESTLE share price has moved up from Rs 7,797.6 to Rs
10,511.6, registering a gain of Rs 2,714.1 or around 34.8%.
Overall, the S&P BSE SENSEX is up 14.6% over the year.
NESTLE Announces Quarterly Results (1QFY20); Net Profit Up 10.8%(Quarterly Result Update)
Aug 5, 2019 | Updated on Aug 5, 2019

For the quarter ended June 2019, NESTLE has posted a net profit of Rs 4 bn (up 10.8% YoY). Sales
on the other hand came in at Rs 30 bn (up 11.2% YoY). Read on for a complete analysis of
NESTLE's quarterly results.

NESTLE Announces Quarterly Results (4QFY19); Net Profit Up 9.3%(Quarterly Result Update)
May 15, 2019 | Updated on May 15, 2019

For the quarter ended March 2019, NESTLE has posted a net profit of Rs 5 bn (up 9.3% YoY). Sales
on the other hand came in at Rs 30 bn (up 8.9% YoY). Read on for a complete analysis of NESTLE's
quarterly results.

NESTLE 2016-17 Annual Report Analysis(Annual Result Update)

Dec 20, 2018 | Updated on Dec 20, 2018

Here's an analysis of the annual report of NESTLE for 2016-17. It includes a full income statement,
balance sheet and cash flow analysis of NESTLE. Also includes updates on the valuation of NESTLE.

NESTLE 2016-17 Annual Report Analysis(Annual Result Update)

Sep 17, 2018 | Updated on Sep 17, 2018

Here's an analysis of the annual report of NESTLE for 2016-17. It includes a full income statement,
balance sheet and cash flow analysis of NESTLE. Also includes updates on the valuation of NESTLE.

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