NESTLE 2020-21 Annual Report Analysis

Fri, 31 Dec

NESTLE has announced its results for the year ended December 2021. Let us have a look at the detailed performance review of the company during FY20-21.

NESTLE Income Statement Analysis

• Operating income during the year rose 10.2% on a year-on-year (YoY) basis.
• The company's operating profit increased by 4.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 22.8% in CY21 as against 23.9% in CY20.
• Depreciation charges increased by 5.3% and finance costs increased by 22.5% YoY, respectively.
• Other income declined by 17.7% YoY.
• Net profit for the year grew by 3.0% YoY.
• Net profit margins during the year declined from 15.6% in CY20 to 14.6% in CY21.

NESTLE Income Statement 2020-21

No. of Mths Year Ending		12 Dec-20*	12 Dec-21*	% Change
Net Sales	Rs m	133,500	147,094	10.2%
Other income	Rs m	1,508	1,241	-17.7%
Total Revenues	Rs m	135,008	148,335	9.9%
Gross profit	Rs m	31,966	33,511	4.8%
Depreciation	Rs m	3,704	3,902	5.3%
Interest	Rs m	1,642	2,012	22.5%
Profit before tax	Rs m	28,128	28,838	2.5%
Tax	Rs m	7,304	7,389	1.2%
Profit after tax	Rs m	20,824	21,449	3.0%
Gross profit margin	%	23.9	22.8
Effective tax rate	%	26.0	25.6
Net profit margin	%	15.6	14.6

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NESTLE Balance Sheet Analysis

• The company's current liabilities during CY21 stood at Rs 26 billion as compared to Rs 25 billion in CY20, thereby witnessing an increase of 4.4%.
• Long-term debt down at Rs 275 million as compared to Rs 317 million during CY20, a fall of 13.4%.
• Current assets fell 35% and stood at Rs 27 billion, while fixed assets rose 47% and stood at Rs 54 billion in CY21.
• Overall, the total assets and liabilities for CY21 stood at Rs 82 billion as against Rs 79 billion during CY20, thereby witnessing a growth of 4%.

NESTLE Balance Sheet as on December 2021

No. of Mths Year Ending		12 Dec-20*	12 Dec-21*	% Change
Networth	Rs m	20,193	20,845	3.2
Current Liabilities	Rs m	24,926	26,032	4.4
Long-term Debt	Rs m	317	275	-13.4
Total Liabilities	Rs m	78,798	81,841	3.9
Current assets	Rs m	41,851	27,388	-34.6
Fixed Assets	Rs m	36,947	54,453	47.4
Total Assets	Rs m	78,798	81,841	3.9

NESTLE Cash Flow Statement Analysis

• NESTLE's cash flow from operating activities (CFO) during CY21 stood at Rs 23 billion on a YoY basis.
• Cash flow from investing activities (CFI) during CY21 stood at Rs -20 billion, an improvement of 508.8% on a YoY basis.
• Cash flow from financial activities (CFF) during CY21 stood at Rs -20 billion on a YoY basis.
• Overall, net cash flows for the company during CY21 stood at Rs -17 billion from the Rs 2 billion net cash flows seen during CY20.

NESTLE Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Dec-20	Dec-21
Cash Flow from Operating Activities	Rs m	24,545	22,714	-7.5%
Cash Flow from Investing Activities	Rs m	-3,215	-19,570	-
Cash Flow from Financing Activities	Rs m	-19,559	-20,186	-
Net Cash Flow	Rs m	1,771	-17,043	-

Current Valuations for NESTLE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 222.4, an improvement from the EPS of Rs 216.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 16,820.0, stands at 75.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 84.4 times, while the price to sales ratio stands at 12.0 times.
• The company's price to cash flow (P/CF) ratio stood at 69.4 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Dec-20*	12 Dec-21*
Sales per share (Unadj.)	Rs	1,384.6	1,525.6
TTM Earnings per share	Rs	216.0	222.4
Diluted earnings per share	Rs	216.0	222.5
Price to Cash Flow	x	75.0	69.4
TTM P/E ratio	x	88.6	75.9
Price / Book Value ratio	x	75.0	84.4
Market Cap	Rs m	1,514,228	1,759,584
Dividends per share (Unadj.)	Rs	200.0	200.0

Ratio Analysis for NESTLE

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.1x during CY21, from 1.7x during CY20. 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 15.3x during CY21, from 18.1x during CY20. 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 declined and down at 102.9% during CY21, from 103.1% during CY21. 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 146.1% during CY21, from 145.1% during CY20. 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 28.7% during CY21, from 28.5% during CY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Dec-20*	12 Dec-21*
Current ratio	x	1.7	1.1
Debtors’ Days	Days	5	4
Interest coverage	x	18.1	15.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	28.5	28.7
Return on equity	%	103.1	102.9
Return on capital employed	%	145.1	146.1

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 down from Rs 17,277.1 to Rs 16,820.0, registering a loss of Rs 457.1 or around 2.6%.

Overall, the S&P BSE SENSEX is up 8.2% over the year.

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

Read: Latest Annual Report Analysis of NESTLE