NESTLE 2019-20 Annual Report Analysis

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NESTLE 2019-20 Annual Report Analysis
Mon, 26 Jul

NESTLE has announced its results for the year ended December 2020. Let us have a look at the detailed performance review of the company during FY19-20.

NESTLE Income Statement Analysis

  • Operating income during the year rose 7.9% on a year-on-year (YoY) basis.
  • The company's operating profit increased by 9.3% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.9% in CY20 as against 23.6% in CY19.
  • Depreciation charges increased by 0.1% and finance costs increased by 27.2% YoY, respectively.
  • Other income declined by 39.3% YoY.
  • Net profit for the year grew by 5.8% YoY.
  • Net profit margins during the year declined from 15.6% in CY19 to 15.4% in CY20.

NESTLE Income Statement 2019-20

No. of Mths Year Ending 12 Dec-19* 12 Dec-20* % Change
Net Sales Rs m 123,689 133,500 7.9%
Other income Rs m 2,484 1,508 -39.3%
Total Revenues Rs m 126,173 135,008 7.0%
Gross profit Rs m 29,243 31,966 9.3%
Depreciation Rs m 3,702 3,704 0.1%
Interest Rs m 1,291 1,642 27.2%
Profit before tax Rs m 26,735 28,128 5.2%
Tax Rs m 7,051 7,304 3.6%
Profit after tax Rs m 19,684 20,824 5.8%
Gross profit margin % 23.6 23.9
Effective tax rate % 26.4 26.0
Net profit margin % 15.6 15.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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NESTLE Balance Sheet Analysis

  • The company's current liabilities during CY20 stood at Rs 25 billion as compared to Rs 22 billion in CY19, thereby witnessing an increase of 13.8%.
  • Long-term debt down at Rs 317 million as compared to Rs 531 million during CY19, a fall of 40.3%.
  • Current assets rose 10% and stood at Rs 42 billion, while fixed assets rose 10% and stood at Rs 37 billion in CY20.
  • Overall, the total assets and liabilities for CY20 stood at Rs 79 billion as against Rs 72 billion during CY19, thereby witnessing a growth of 10%.

NESTLE Balance Sheet as on December 2020

No. of Mths Year Ending 12 Dec-19* 12 Dec-20* % Change
Networth Rs m 19,189 20,193 5.2
 
Current Liabilities Rs m 21,906 24,926 13.8
Long-term Debt Rs m 531 317 -40.3
Total Liabilities Rs m 71,729 78,798 9.9
 
Current assets Rs m 38,172 41,851 9.6
Fixed Assets Rs m 33,558 36,947 10.1
Total Assets Rs m 71,729 78,798 9.9
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



NESTLE Cash Flow Statement Analysis

  • NESTLE's cash flow from operating activities (CFO) during CY20 stood at Rs 25 billion, an improvement of 6.9% on a YoY basis.
  • Cash flow from investing activities (CFI) during CY20 stood at Rs -3 billion on a YoY basis.
  • Cash flow from financial activities (CFF) during CY20 stood at Rs -20 billion, an improvement of 46% on a YoY basis.
  • Overall, net cash flows for the company during CY20 stood at Rs 2 billion from the Rs -12 billion net cash flows seen during CY19.

NESTLE Cash Flow Statement 2019-20

Particulars No. of months 12 12 % Change
Year Ending Dec-19 Dec-20
Cash Flow from Operating Activities Rs m 22,953 24,545 6.9%
Cash Flow from Investing Activities Rs m 830 -3,215 -
Cash Flow from Financing Activities Rs m -36,015 -19,559 -
Net Cash Flow Rs m -12,233 1,771 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Current Valuations for NESTLE

  • The trailing twelve-month earnings per share (EPS) of the company stands at Rs 216.0, an improvement from the EPS of Rs 204.2 recorded last year.
  • The price to earnings (P/E) ratio, at the current price of Rs 18,040.0, stands at 80.6 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 75.0 times, while the price to sales ratio stands at 11.3 times.
  • The company's price to cash flow (P/CF) ratio stood at 70.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending 12 Dec-19* 12 Dec-20*
Sales per share (Unadj.) Rs 1,282.8 1,384.6
TTM Earnings per share Rs 204.2 216.0
Diluted earnings per share Rs 204.2 216.0
Price to Cash Flow x 74.4 70.9
TTM P/E ratio x 80.6 80.6
Price / Book Value ratio x 63.3 75.0
Market Cap Rs m 1,739,339 1,739,339
Dividends per share (Unadj.) Rs 342.0 200.0
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



Ratio Analysis for NESTLE

  • Solvency Ratios
  • Current Ratio: The company's current ratio deteriorated and stood at 1.7x during CY20, from 1.7x during CY19. 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 18.1x during CY20, from 21.7x during CY19. 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 103.1% during CY20, from 102.6% during CY20. 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 145.1% during CY20, from 142.1% during CY19. 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 declined and down at 28.5% during CY20, from 29.2% during CY19. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending 12 Dec-19* 12 Dec-20*
Current ratio x 1.7 1.7
Debtors’ Days Days 4 5
Interest coverage x 21.7 18.1
Debt to equity ratio x 0.0 0.0
Return on assets % 29.2 28.5
Return on equity % 102.6 103.1
Return on capital employed % 142.1 145.1
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, 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 17,231.4 to Rs 18,040.0, registering a gain of Rs 808.6 or around 4.7%.

Overall, the S&P BSE SENSEX is up 39.6% over the year.

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

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