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NESTLE 2017-18 Annual Report Analysis

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NESTLE 2017-18 Annual Report Analysis
Mon, 25 Mar

NESTLE has announced its results for the year ended December 2018. Let us have a look at the detailed performance review of the company during FY17-18.

NESTLE Income Statement Analysis

  • Operating income during the year rose 12.8% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 24.9% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.2% in CY18 as against 20.9% in CY17.
  • Depreciation charges decreased by 1.9% and finance costs increased by 21.8% YoY, respectively.
  • Other income grew by 46.3% YoY.
  • Net profit for the year grew by 31.2% YoY.
  • Net profit margins during the year grew from 12.0% in CY17 to 13.9% in CY18.

NESTLE Income Statement 2017-18

No. of Mths Year Ending 12 Dec-17* 12 Dec-18* % Change
Net Sales Rs m 100,096 112,923 12.8%
Other income Rs m 1,769 2,589 46.3%
Total Revenues Rs m 101,865 115,512 13.4%
Gross profit Rs m 20,965 26,177 24.9%
Depreciation Rs m 3,423 3,357 -1.9%
Interest Rs m 919 1,120 21.8%
Profit before tax Rs m 18,393 24,290 32.1%
Tax Rs m 6,141 8,220 33.9%
Profit after tax Rs m 12,252 16,069 31.2%
Gross profit margin % 20.9 23.2
Effective tax rate % 33.4 33.8
Net profit margin % 12.0 13.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



NESTLE Balance Sheet Analysis

  • The company's current liabilities during CY18 stood at Rs 19 billion as compared to Rs 15 billion in CY17, thereby witnessing an increase of 24.3%.
  • Long-term debt down at Rs 351 million as compared to Rs 351 million during CY17, a fall of 0.0%.
  • Current assets rose 20% and stood at Rs 47 billion, while fixed assets fell 8% and stood at Rs 25 billion in CY18.
  • Overall, the total assets and liabilities for CY18 stood at Rs 81 billion as against Rs 74 billion during CY17, thereby witnessing a growth of 10%.

NESTLE Balance Sheet as on December 2018

No. of Mths Year Ending 12 Dec-17* 12 Dec-18* % Change
Networth Rs m 34,206 36,737 7.4
 
Current Liabilities Rs m 14,927 18,550 24.3
Long-term Debt Rs m 351 351 0.0
Total Liabilities Rs m 73,626 80,881 9.9
 
Current assets Rs m 39,374 47,370 20.3
Fixed Assets Rs m 27,103 25,058 -7.5
Total Assets Rs m 73,626 80,881 9.9
* 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 CY18 stood at Rs 21 billion, an improvement of 12.9% on a YoY basis.
  • Cash flow from investing activities (CFI) during CY18 stood at Rs -524 million on a YoY basis.
  • Cash flow from financial activities (CFF) during CY18 stood at Rs -13 billion on a YoY basis.
  • Overall, net cash flows for the company during CY18 stood at Rs 7 billion from the Rs 7 billion net cash flows seen during CY17.

NESTLE Cash Flow Statement 2017-18

Particulars No. of months 12 12 % Change
Year Ending Dec-17 Dec-18
Cash Flow from Operating Activities Rs m 18,178 20,525 12.9%
Cash Flow from Investing Activities Rs m -1,306 -524 -
Cash Flow from Financing Activities Rs m -9,966 -13,174 -
Net Cash Flow Rs m 6,906 6,826 -1.2%
* 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 166.7, an improvement from the EPS of Rs 127.1 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 10,511.6, stands at 63.1 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 24.4 times, while the price to sales ratio stands at 7.9 times.
  • The company's price to cash flow (P/CF) ratio stood at 52.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Dec-17* 12 Dec-18*
Sales per share (Unadj.) Rs 1,038.1 1,171.2
TTM Earnings per share Rs 127.1 166.7
Diluted earnings per share Rs 127.1 166.7
Price to Cash Flow x 64.7 52.2
TTM P/E ratio x 63.1 63.1
Price / Book Value ratio x 19.5 24.4
Market Cap Rs m 1,013,528 1,013,528
Dividends per share (Unadj.) Rs 86.0 115.0
* 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 deteriorated and stood at 2.6x during CY18, from 2.6x during CY17. 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 improved and stood at 22.7x during CY18, from 21.0x during CY17. 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 43.7% during CY18, from 35.8% during CY18. 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 68.5% during CY18, from 55.9% during CY17. 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 21.3% during CY18, from 17.9% during CY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Dec-17* 12 Dec-18*
Current ratio x 2.6 2.6
Debtors’ Days Days 3 4
Interest coverage x 21.0 22.7
Debt to equity ratio x 0.0 0.0
Return on assets % 17.9 21.3
Return on equity % 35.8 43.7
Return on capital employed % 55.9 68.5
* 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 7,797.6 to Rs 10,511.6, registering a gain of Rs 2,714.1 or around 34.8%.

Overall, the S&P BSE SENSEX is up 14.6% over the year.

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

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