NESTLE 2016-17 Annual Report Analysis

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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

No. of Mths Year Ending 12 Dec-16* 12 Dec-17* % Change
Net Sales Rs m 91,414 100,096 9.5%
Other income Rs m 1,509 1,769 17.2%
Total Revenues Rs m 92,923 101,865 9.6%
Gross profit Rs m 18,498 20,965 13.3%
Depreciation Rs m 3,536 3,423 -3.2%
Interest Rs m 909 919 1.1%
Profit before tax Rs m 15,562 18,393 18.2%
Tax Rs m 5,440 6,141 12.9%
Profit after tax Rs m 10,014 12,252 22.4%
Gross profit margin % 20.2 20.9
Effective tax rate % 35.0 33.4
Net profit margin % 10.8 12.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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

No. of Mths Year Ending 12 Dec-16* 12 Dec-17* % Change
Networth Rs m 32,823 34,206 4.2
 
Current Liabilities Rs m 13,668 14,927 9.2
Long-term Debt Rs m 332 351 6.0
Total Liabilities Rs m 68,105 73,626 8.1
 
Current assets Rs m 32,828 39,374 19.9
Fixed Assets Rs m 29,176 27,103 -7.1
Total Assets Rs m 68,105 73,626 8.1
* 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 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

Particulars No. of months 12 12 % Change
Year Ending Dec-16 Dec-17
Cash Flow from Operating Activities Rs m 14,659 18,178 24.0%
Cash Flow from Investing Activities Rs m -1,259 -1,306 -
Cash Flow from Financing Activities Rs m -6,666 -9,966 -
Net Cash Flow Rs m 6,744 6,906 2.4%
* 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 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

No. of Mths Year Ending 12 Dec-16* 12 Dec-17*
Sales per share (Unadj.) Rs 948.1 1,038.1
TTM Earnings per share Rs 103.9 127.1
Diluted earnings per share Rs 103.9 127.1
Price to Cash Flow x 80.5 69.6
TTM P/E ratio x 69.2 69.2
Price / Book Value ratio x 17.2 19.5
Market Cap Rs m 1,090,505 1,090,505
Dividends per share (Unadj.) Rs 63.0 86.0
* 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 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

No. of Mths Year Ending 12 Dec-16* 12 Dec-17*
Current ratio x 2.4 2.6
Debtors’ Days Days 4 3
Interest coverage x 18.1 21.0
Debt to equity ratio x 0.0 0.0
Return on assets % 16.0 17.9
Return on equity % 30.5 35.8
Return on capital employed % 49.4 55.9
* 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 7,950.9 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)

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