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

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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

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

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

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

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)