NESTLE 2016-17 Annual Report Analysis

Thu, 20 Dec

NESTLE has announced its results for the year ended December 2017. Let us have a look at the detailed performance review of the company during FY16-17.

NESTLE Income Statement Analysis

• Operating income during the year rose 9.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 13.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 20.9% in CY17 as against 20.2% in CY16.
• Depreciation charges decreased by 3.2% and finance costs increased by 1.1% YoY, respectively.
• Other income grew by 17.2% YoY.
• Net profit for the year grew by 22.4% YoY.
• Net profit margins during the year grew from 10.8% in CY16 to 12.0% in CY17.

NESTLE Income Statement 2016-17

NESTLE Balance Sheet Analysis

• The company's current liabilities during CY17 stood at Rs 15 billion as compared to Rs 14 billion in CY16, thereby witnessing an increase of 9.2%.
• Long-term debt stood at Rs 351 million as compared to Rs 332 million during CY16, a growth of 6.0%.
• Current assets rose 20% and stood at Rs 39 billion, while fixed assets fell 7% and stood at Rs 27 billion in CY17.
• Overall, the total assets and liabilities for CY17 stood at Rs 74 billion as against Rs 68 billion during CY16, thereby witnessing a growth of 8%.

NESTLE Balance Sheet as on December 2017

NESTLE Cash Flow Statement Analysis

• NESTLE's cash flow from operating activities (CFO) during CY17 stood at Rs 18 billion, an improvement of 24.0% on a YoY basis.
• Cash flow from investing activities (CFI) during CY17 stood at Rs -1 billion, an improvement of 3.7% on a YoY basis.
• Cash flow from financial activities (CFF) during CY17 stood at Rs -10 billion on a YoY basis.
• Overall, net cash flows for the company during CY17 stood at Rs 7 billion from the Rs 7 billion net cash flows seen during CY16.

NESTLE Cash Flow Statement 2016-17

Current Valuations for NESTLE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 127.1, an improvement from the EPS of Rs 103.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 11,310.0, stands at 69.2 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 19.5 times, while the price to sales ratio stands at 6.6 times.
• The company's price to cash flow (P/CF) ratio stood at 69.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

Ratio Analysis for NESTLE

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.6x during CY17, from 2.4x during CY16. 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 deteriorated and stood at 21.0x during CY17, from 18.1x during CY16. 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 35.8% during CY17, from 30.5% during CY17. 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 55.9% during CY17, from 49.4% during CY16. 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 17.9% during CY17, from 16.0% during CY16. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

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 7,950.9 to Rs 11,310.0, registering a gain of Rs 3,359.1 or around 42.2%.

Overall, the S&P BSE SENSEX is up 7.4% over the year.

(To know more, check out historical annual results for NESTLE and quarterly results for NESTLE)