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NESTLE 2016-17 Annual Report Analysis

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NESTLE 2016-17 Annual Report Analysis
Mon, 17 Sep

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 rise and up 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 Ending12 Dec-16*12 Dec-17*% Change
Net SalesRs m91,414100,0969.5%
Other incomeRs m1,5091,76917.2%
Total RevenuesRs m92,923101,8659.6%
Gross profitRs m18,49820,96513.3%
DepreciationRs m3,5363,423-3.2%
InterestRs m9099191.1%
Profit before taxRs m15,56218,39318.2%
TaxRs m5,4406,14112.9%
Profit after taxRs m10,01412,25222.4%
Gross profit margin%20.220.9
Effective tax rate%35.033.4
Net profit margin%10.812.0
* 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 Ending12 Dec-16*12 Dec-17*% Change
NetworthRs m32,82334,2064.2
 
Current LiabilitiesRs m13,66814,9279.2
Long-term DebtRs m3323516.0
Total LiabilitiesRs m68,10573,6268.1
 
Current assetsRs m32,82839,37419.9
Fixed AssetsRs m 29,17627,103-7.1
Total AssetsRs m68,10573,6268.1
* 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

ParticularsNo. of months1212% Change
Year EndingDec-16Dec-17
Cash Flow from Operating ActivitiesRs m14,65918,17824.0%
Cash Flow from Investing ActivitiesRs m-1,259-1,306-
Cash Flow from Financing ActivitiesRs m-6,666-9,966-
Net Cash FlowRs m6,7446,9062.4%
* 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 10,297.5, stands at 67.4 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 63.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending12 Dec-16*12 Dec-17*
Sales per share (Unadj.)Rs948.11,038.1
TTM Earnings per shareRs103.9127.1
Diluted earnings per shareRs103.9127.1
Price to Cash Flow x73.363.3
TTM P/E ratiox67.467.4
Price / Book Value ratiox17.219.5
Market CapRs m992,885992,885
Dividends per share (Unadj.)Rs63.086.0
* 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 Ending12 Dec-16*12 Dec-17*
Current ratiox2.42.6
Debtors’ DaysDays43
Interest coveragex18.121.0
Debt to equity ratiox0.00.0
Return on assets%16.017.9
Return on equity%30.535.8
Return on capital employed%49.455.9
* 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 7,335.3 to Rs 10,297.5, registering a gain of Rs 2,962.2 or around 40.4%.

Overall, the S&P BSE SENSEX is up 16.6% over the year.

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

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