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Formula: Quick Ratio = (Current Assets−Inventories) / Current Liabilities

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Dutch Lady generally exhibited stronger liquidity positions compared to Nestlé Malaysia, particularly in 2021.​

Nestlé Malaysia consistently operated with a Quick Ratio below 1.0, which may reflect a strategy of maintaining lower current assets relative to liabilities or efficient working capital management.

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Trend Indication and Comparison

Dutch Lady has stronger short-term liquidity, which means better ability to meet obligations. However, overly high liquidity might signal under-utilized assets or conservative cash management.

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To thoroughly analyze the financial performance of Nestle and Dutch Lady over the past five years in three key areas Liquidity, Profitability, and Leverage

We will select two ratios from each category.

The analysis will include formulas, calculations, trends, and recommendations based on the performance of both companies.

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The future financial performance based on past financial trends and current industry outlook. It includes trends, forecasts, opportunities and challenges.

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Nestlé Malaysia's performance from year 2006 to 2010.

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From 2020 to 2023, Nestlé Malaysia Berhad showed steady growth. Revenue rose from RM 5.41 billion to RM 7.05 billion, and net profit increased from RM 552.7 million to RM 659.9 million. Dividends paid also grew during this period. However, in 2024, there was a decline. Revenue dropped to RM 6.22 billion, and net profit fell to RM 415.6 million. Dividends paid also decreased. This could be due to rising costs or changes in market demand. Compared to Dutch Lady, Nestlé has maintained stronger profitability margins, indicating a stable foundation for future growth.

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This highlights Nestlé Malaysia’s future financial outlook, including short-term recovery, key growth drivers and long-term potential. It summarizes how the brand is expected to bounce back and grow in response to market trends and strategic investments.

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Listen to the audio for a quick summary of the industry outlook.

Script: "Hi everyone! I’m here to share a quick overview of the food and beverage industry outlook in Malaysia. Over the past few years, the industry has seen steady growth, mainly due to urbanization, rising incomes and changes in lifestyle. More consumers are looking for convenient, healthy, and innovative food options, which is great news for companies like Nestlé. But it’s not all smooth sailing. The industry faces challenges like the rising cost of raw materials, currency fluctuations, and increasing competition from both local and international brands. To stay ahead, companies need to focus on sustainability, invest in new technologies, and stay connected to evolving consumer needs. Overall, the outlook is still positive, especially for well-established brands that can adapt and innovate. Thanks for listening!"

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This video highlights three key areas where Nestlé Malaysia can grow: health & wellness demand, product innovation, and digital expansion. If Nestlé invests effectively in these opportunities, it is likely to achieve steady financial growth in the coming years.

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The possible challenges Nestlé Malaysia might face in the future and why it’s important for the company to plan ahead.

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Publicly disclosed liquidity ratios (like Current Ratio and Quick Ratio) are limited in public summaries. However, both companies:

Maintain positive working capital

Consistently meet short-term liabilities

Operate in consumer goods/FMCG, requiring efficient inventory and cash management

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While Dutch Lady has shown potential (especially in 2021) and maintains strong liquidity, Nestlé’s consistency, brand strength, and long-term stability make it a stronger performer, particularly for investors and stakeholders seeking reliable returns.

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We learned a lot about Nestlé (Malaysia)'s financial advantages and disadvantages in comparison to Dutch Lady Milk Industries by performing the ratio study. We discovered that strong liquidity does not always translate into higher profitability by using liquidity ratios to examine how each company handles its short-term obligations. We were able to evaluate operational efficiency and margins with the use of profitability ratios, which demonstrated how Nestlé sustains consistent profits through scale and brand strength. Our comprehension of capital structure and financial risk has been enhanced by leverage ratios. All things considered, this comparison enhanced our ability to analyze financial data and enabled us to relate numerical data to actual business performance and strategy.

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We discovered how historical financial trends and industry outlooks can create accurate financial forecasts by examining Nestlé Malaysia's possibilities for the future. We saw the value of integrating past data with outside variables including consumer demand, prevailing economic conditions, and trends in innovation. This section assisted us in assessing difficulties like growing input costs and regulatory changes, as well as growth prospects like export potential and product diversification. Above all, we understood that forecasting the future required both strategic thinking and quantitative analysis. This segment improved our capacity for critical thought and long-term financial planning.

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CalculationFormula: Current Ratio = Current Assets / Current Liabilities

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Dutch Lady generally maintained a stronger liquidity position compared to Nestlé Malaysia, especially notable in 2021 and 2022.​

Nestlé Malaysia consistently operated with a current ratio below 1.0, which may reflect a strategy of maintaining lower current assets relative to liabilities, possibly due to efficient working capital management or reliance on other financing methods.

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The gray dotted line at 1.0 represents the healthy benchmark for liquidity.

Dutch Lady surpassed this benchmark in 2021–2022, indicating better short-term financial health.

Nestlé Malaysia remained below 1.0 throughout, suggesting tighter liquidity management or reliance on short-term financing.

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The gray dashed line at 1.0 represents the ideal benchmark — a ratio above this means the company can cover short-term liabilities without relying on inventory.

Dutch Lady exceeded this mark in 2021 and came close in 2022.

Nestlé Malaysia stayed consistently below the benchmark, suggesting tighter short-term liquidity.

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Over the last five years, Nestlé Malaysia has demonstrated consistent financial growth and resilience, even in the face of global challenges such as inflation and supply chain disruptions. The company’s total assets grew from RM5.0 billion in 2019 to RM6.1 billion in 2023, supported by ongoing investments in automation and production capacity. During the same period, revenue increased steadily from RM5.5 billion to RM7.0 billion, driven by strong consumer demand and continuous product innovation.

In 2023, Nestlé Malaysia recorded a strong net profit of RM700 million, reflecting its effective cost management and ability to remain profitable in a competitive environment. The company maintains a leading position in Malaysia’s food and beverage industry, with key products such as Milo, Maggi, and Nescafé dominating the malt beverage, instant noodles, and instant coffee markets respectively. Its success is further reinforced by an extensive distribution network, high brand recognition, and a loyal customer base.

Nestlé Malaysia also emphasizes long-term sustainability through its “Nestlé Cares” and “Net Zero Roadmap” initiatives, which focus on reducing waste, promoting sustainable packaging, and cutting carbon emissions. These efforts align with Nestlé’s global environmental goals and enhance the company’s reputation as a responsible corporate leader.

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Risk analysis anf recommendations

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This section explores three key risks faced by Nestle Malaysia and suggest practical recommendations to address each one.

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Effect on the Performance of the Financials:

A) Exchange rate fluctuations can affect the valuation of foreign assets and liabilities on the balance sheet;

B) Currency fluctuations can result in unpredictable revenue streams for exports when translated back to Ringgit;

C) A weaker Ringgit raises import expenses, which raises overall production costs.

Mitigation Strategy:

Nestlé Malaysia can use something called forward contracts to deal with money and price changes. It’s kind of like making a deal ahead of time to buy or sell stuff at a set price later. This helps them avoid losing money if prices or exchange rates suddenly go crazy.

Since they buy a lot of raw stuff in US dollars, and the Ringgit goes up and down, they use these contracts to lock in the price early. That way, they don’t get surprised later and can keep their costs more steady.

Their 2023 report even says they use things like forward exchange contracts and futures to protect themselves. Most of their raw stuff is bought in USD, so they usually make these deals for 3 to 5 months ahead.

Doing this helps them stay safe from big price jumps and keeps their profits more stable.

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Mitigation strategy:

They can set up a system to make sure they follow all the rules. This system is about having clear rules, teaching everyone what to do, and checking that things are going right. The idea is to stop problems before they happen and keep everything running smoothly.

To mitigate regulatory and compliance risks, Nestlé Malaysia should establish or enhance a Comprehensive Compliance Management System (CMS)

Here’s how they can do it :

1. Establish Clear Policies and Procedures: Nestlé Malaysia should create policies that include all pertinent regulatory obligations, both domestically (with regard to Malaysian laws) and internationally (with regard to international laws). Important topics including labour laws, tax laws, environmental laws, and food safety rules should all be covered by these policies and the company should follow them.

2. Ongoing Compliance Training Programs: Regular training on compliance issues should be provided to staff members. Especially those working in regulatory sensitive departments like production, HR, and finance. This guarantees that the workers have knowledge about the most recent rules and know how to apply them to their particular roles.

3.Monitoring and Auditing: To make sure that the defined policies are followed, the business should put in place ongoing monitoring systems. To find any possible gaps or non-compliance areas, internal audits should be carried out on a regular basis. To keep current, the compliance team should monitor legislative changes and modify policies as necessary

4. Dedicated Compliance Team: Accountability is ensured by designating a dedicated compliance officer or team to manage the CMS. This group would be in charge of putting the CMS into practice, reporting instances of non-compliance, and suggesting solutions.

5. Regular Reporting and Communication: Creating regular reporting avenues makes sure that the organization as a whole is informed of compliance status. This keeps management aware of any type of possible risks.

By managing regulatory and compliance risk through comprehensive compliance management systems Nestle Malaysia can prevent expensive fines and any type of harm to their company. Therefore this approach will improve the company’s long term financial stability and sustainability.

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This audio gives a more detailed outlook about Commodity price risk and suggests ways to mitigate this risk

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Nestlé (Malaysia) Berhad is a household name and a subsidiary of the Switzerland-based Nestlé S.A., the world’s largest food and beverage company. Established in 1912, Nestlé Malaysia has over 110 years of presence in the country and has become a trusted brand across generations. The company’s mission is to “Unlock the Power of Food to Enhance the Quality of Life,” reflecting its commitment to health, wellness, and sustainability. Nestlé Malaysia operates across several product categories, producing, marketing, and distributing Halal-certified goods. These include beverages (Milo, Nescafé), food (Maggi), dairy (Nestlé Omega Plus, Nestlé Milk), nutrition (CERELAC, Lactogrow), confectionery (KitKat), ice cream, and health science products. It operates multiple manufacturing facilities in Malaysia, reinforcing its role as a key local producer and exporter within the region.

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Dutch Lady Milk Industries Berhad (Dutch Lady Malaysia) is one of Malaysia’s leading dairy companies and a significant competitor to Nestlé in the dairy segment. Founded in 1963, it is a subsidiary of FrieslandCampina, a Netherlands-based global dairy cooperative.

Dutch Lady focuses on dairy nutrition and offers a range of products including Dutch Lady PureFarm milk, Dutch Lady Growing Up Milk, and yogurt drinks. Its business is centered around liquid milk, UHT milk, and children’s growing-up milk, where it holds a strong position in the Malaysian market.

Although its product portfolio is less diversified than Nestlé’s, Dutch Lady is known for its quality, nutritional focus, and consistent consumer trust. The company has carved out a niche in the dairy market and continues to compete closely with Nestlé in milk-related products.