NESTLE 2018-19 Annual Report Analysis

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NESTLE 2018-19 Annual Report Analysis
Wed, 9 Dec

NESTLE has announced its results for the year ended December 2019. Let us have a look at the detailed performance review of the company during FY18-19.

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 9.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 23.2% in CY19 as against 23.2% in CY18.
  • Depreciation charges decreased by 5.8% and finance costs increased by 7.0% YoY, respectively.
  • Other income declined by 4.7% YoY.
  • Net profit for the year grew by 22.6% YoY.
  • Net profit margins during the year grew from 13.9% in CY18 to 15.6% in CY19.

NESTLE Income Statement 2018-19

No. of Mths Year Ending 12 Dec-18* 12 Dec-19* % Change
Net Sales Rs m 112,923 123,689 9.5%
Other income Rs m 2,589 2,469 -4.7%
Total Revenues Rs m 115,512 126,158 9.2%
Gross profit Rs m 26,177 28,643 9.4%
Depreciation Rs m 3,357 3,164 -5.8%
Interest Rs m 1,120 1,198 7.0%
Profit before tax Rs m 24,290 26,750 10.1%
Tax Rs m 8,220 7,054 -14.2%
Profit after tax Rs m 16,069 19,696 22.6%
Gross profit margin % 23.2 23.2
Effective tax rate % 33.8 26.4
Net profit margin % 13.9 15.6
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Company Reports, Regulatory Filings, Equitymaster



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NESTLE Balance Sheet Analysis

  • The company's current liabilities during CY19 stood at Rs 21 billion as compared to Rs 19 billion in CY18, thereby witnessing an increase of 15.8%.
  • Long-term debt stood at Rs 531 million as compared to Rs 351 million during CY18, a growth of 51.2%.
  • Current assets fell 19% and stood at Rs 38 billion, while fixed assets fell 5% and stood at Rs 24 billion in CY19.
  • Overall, the total assets and liabilities for CY19 stood at Rs 71 billion as against Rs 81 billion during CY18, thereby witnessing a fall of 13%.

NESTLE Balance Sheet as on December 2019

No. of Mths Year Ending 12 Dec-18* 12 Dec-19* % Change
Networth Rs m 36,737 19,323 -47.4
 
Current Liabilities Rs m 18,550 21,475 15.8
Long-term Debt Rs m 351 531 51.2
Total Liabilities Rs m 80,881 70,582 -12.7
 
Current assets Rs m 47,370 38,172 -19.4
Fixed Assets Rs m 25,058 23,700 -5.4
Total Assets Rs m 80,881 70,582 -12.7
* 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 CY19 stood at Rs 22 billion, an improvement of 8.8% on a YoY basis.
  • Cash flow from investing activities (CFI) during CY19 stood at Rs 830 million on a YoY basis.
  • Cash flow from financial activities (CFF) during CY19 stood at Rs -35 billion on a YoY basis.
  • Overall, net cash flows for the company during CY19 stood at Rs -12 billion from the Rs 7 billion net cash flows seen during CY18.

NESTLE Cash Flow Statement 2018-19

Particulars No. of months 12 12 % Change
Year Ending Dec-18 Dec-19
Cash Flow from Operating Activities Rs m 20,525 22,337 8.8%
Cash Flow from Investing Activities Rs m -524 830 -
Cash Flow from Financing Activities Rs m -13,174 -35,400 -
Net Cash Flow Rs m 6,826 -12,233 -
* 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 204.3, an improvement from the EPS of Rs 166.7 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 17,553.6, stands at 81.7 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 62.8 times, while the price to sales ratio stands at 9.8 times.
  • The company's price to cash flow (P/CF) ratio stood at 74.0 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Dec-18* 12 Dec-19*
Sales per share (Unadj.) Rs 1,171.2 1,282.8
TTM Earnings per share Rs 166.7 204.3
Diluted earnings per share Rs 166.7 204.3
Price to Cash Flow x 87.1 74.0
TTM P/E ratio x 81.7 81.7
Price / Book Value ratio x 24.4 62.8
Market Cap Rs m 1,692,513 1,692,513
Dividends per share (Unadj.) Rs 115.0 281.0
* 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 1.8x during CY19, from 2.6x during CY18. 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 23.3x during CY19, from 22.7x during CY18. 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 101.9% during CY19, from 43.7% during CY19. 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 140.8% during CY19, from 68.5% during CY18. 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 29.6% during CY19, from 21.3% during CY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Dec-18* 12 Dec-19*
Current ratio x 2.6 1.8
Debtors’ Days Days 4 4
Interest coverage x 22.7 23.3
Debt to equity ratio x 0.0 0.0
Return on assets % 21.3 29.6
Return on equity % 43.7 101.9
Return on capital employed % 68.5 140.8
* 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 14,237.4 to Rs 17,553.6, registering a gain of Rs 3,316.2 or around 23.3%.

Overall, the S&P BSE SENSEX is up 13.7% over the year.

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

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