HLIB:Nestlé Malaysia faces ongoing challenges despite strong quarterly Rebound
KUALA LUMPUR: Nestlé (Malaysia) Bhd's performance remained subdued amid domestic headwinds, with lingering boycott-related sentiment expected to continue weighing on its recovery, according to Hong Leong Investment Bank Bhd (HLIB Research).
This comes despite Nestlé Malaysia recording a strong quarter-on-quarter (QoQ) rebound in its first-quarter 2025 earnings, driven by festive-season demand and the full impact of earlier price adjustments.
HLIB Research noted that Nestlé Malaysia is managing rising commodity costs through a consistent emphasis on operational efficiency, cost-saving initiatives and increased digitalisation.
While acknowledging the ongoing volatility in input costs, the company remains committed to minimising further price increases this year, in light of subdued consumer sentiment and the strategic need to preserve market competitiveness.
Despite resilient sales momentum post-Ramadhan and Hari Raya, the firm remains cautious, noting that overall sales are likely to remain under pressure due to persistent negative sentiment from the ongoing boycott and are unlikely to return to pre-boycott levels in the near term.
"On the export side, management clarified that the majority of Nestlé Malaysia's exports are directed towards Asean and Oceania, with no direct exposure to the US market.
"Consequently, the group expects negligible impact from the US-imposed tariffs," HLIB Research added.
The firm kept its "hold" call on Nestlé Malaysia with an unchanged target price of RM78.
Keywords: Us Malaysia Nestle Hong Leong Hlib Research
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