We will select two ratios from each category.

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

_{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!"}

• Maintain positive working capital

• Consistently meet short-term liabilities

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

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.

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.

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.

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.

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

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

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.

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.

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.

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.