TRADE DOCUMENT

 NESTLE'S TRADE DOCUMENTS

Figure 1

Figure 1 is Statements of Comprehensive Income for Nestle Malaysia for the year ended 31 December 2022 was extracted from Corporate Governance and Financial Reports. Based on the statements above, the revenue for the Group with a total amount of RM6.7b in 2022 was recognized which shows gradual improvements from the previous year meanwhile the profit for the year amounting to RM620M was earned.

Figure 2

Figure 3

Referring to Figure 3 above notes 17 to financial statements has clarified the Group's total revenue for the year ended December 31, 2022, was RM6.7 billion, making it the most significant amount in the Group's financial statements. Revenue from the sale of goods is recognized when control of the product is transferred to the customer and is measured based on the consideration specified in the contract less the price. Allowances, other trade discounts, and customer price promotions (collectively referred to as "Trade Expenses").

Due to the complexity and variety of trade spending arrangements, nestle considered trade spend measurement and integrity to be an area of ​​focus. To address this focus, nestle has reviewed the sales processes and trade expense arrangement and tested appropriate controls for the integrity, measurement, and recording of trade expenditures. Besides, the Company has confirmed that promised transaction costs have been properly incurred during the year by reviewing credits issued to customers after the reporting date. Having said that, it is believed that both domestic and export sales have contributed to the sum amount of profit and revenue by Nestle. For further explanation, let’s take a look at the diagram below regarding domestic and export sales for the second quarter of 2022.

Figure 4

Figure 3 above illustrated domestic and export sales for Nestle extracted from interim Financial Reports in the second quarter of 2022. Nestlé Malaysia BHD continued its growth trajectory, delivering strong sales and earnings in the second quarter that ended on 30 June 2022. Net profit for the second quarter increased 26.1% to MYR 169.65 million from MYR 134.53 million in the same period last year. As sales increased by 18.8 percent from the previous RM1.38 billion to RM1.64 billion.

Nestlé Malaysia said this was due to both domestic and export sales, which increased by 12.5% ​​and 48.1% respectively. In the first half of the year, the company reported that net profit increased to 374.83 million ringgit from the previous year's 309.69 million ringgit, while sales increased by 17.8% from 2.83 billion ringgit the previous year. Both domestic and export sales contributed to this, increasing by 13.7% and 36.1% respectively. Sales continued to recover as travel restrictions were lifted, supported by strong growth in both core food and beverage (F&B) and out-of-home (OOH) businesses. 

Nestlé Malaysia offers a wide range of products across 10 categories, from global icons to local favorites. Among the well-known product that has been exported to other countries are including Milo, Maggi, Nescafe, Harvest Gourmet, and others. Nestlé Malaysia manufactures products for export to more than 50 countries around the world, mainly through Nestlé subsidiaries in many countries such as Australia, New Zealand, Japan, EU, USA, and other Southeast Asian countries. However, since the information is private and confidential, it is not disclosed it their official website thus we can only provide general information regarding their import and export country and products.

On the other hand, Nestle implemented an intensive distribution strategy where the marketing strategy involves making a company’s products available to customers in as many places as possible. The company works with a large number of distributors, retailers, and e-commerce platforms to make its products available to consumers in different regions. Nestle used IT tools such as Enterprise Resource Planning (ERP) and Electronic Data Interchange (EDI) to manage daily activities from procurement, accounting, purchase order, and delivery order. 

For example, Euro Arcade is the official distributor for Nestle in Malaysia and Singapore. Euro Arcade Limited is an established organization with headquarters in Hong Kong, subsidiaries in Malaysia, and partner offices in Panama and the United Kingdom. In a short period, Euro Arcade has managed to build a strong reputation in sourcing, distributing, and trading with FMCG companies around the world. 

Figure 5

Figure 6

        Figure 6 above is the summarization of Nestle's revenue, profit, and sales for the year ended 31 December 2022. Having said that, it is well illustrated that Nestle is well established in the market since the growth in revenue and sales in 2022 is better than in the previous year.