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

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

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

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

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

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)