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Nestle has been serving this world for over one hundred and fourteen years. It has
differentiated itself through its high quality product mix and positioned itself
as health and Nutrition Company while targeting the health conscious people
throughout the world. Nestle started its operations in Pakistan back in1988,
by acquiring a diary company MILK PAK LTD, when people of Pakistan actually
needed it.
Since Pakistan is the fifth worlds largest milk producing country therefore Nestle
deals mainly in dairy products. Moreover it also sells juices, chocolates, prepared
food like noodles, baby food, infant formula milk and breakfast cereals in Pakistan.
Nestle is a low cost leader with its efficient operations hence it provides its
customers with high quality products and sells them at a premium price. Therefore
it is earning good profits.
Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and
Kabirwala. The milk processing plant at Kabirwala district is the Nestls world
largest milk processing plant.
When nestle introduced its products in Pakistan people were neither aware nor
accustomed to them. Therefore nestle ran an extensive marketing campaign to
educate people and create a need for its products.
Pakistan is a land where fresh eatables are readily available. Nestle should sell
the same quality of products in Pakistan as it sells abroad. It should also introduce
more brands in Pakistani market which it offers in other markets of the world since
consumers in Pakistan are becoming more demanding day by day
Growth
Nestle, the world's largest packaged foods maker, forecast sales growth around 5
percent this year, at the low end of its long-term goal, as it grapples with deflation
in Europe and a slowdown in China.
Nestls long-term model calls for growth of 5 to 6 percent, but it fell below that in
2014, coming in at 4.5 percent.
Chief Executive Paul Bulcke called the results "solid" in a tough environment. He
said 2015 would be similar, but that Nestle still aimed for growth "around 5
percent", language analysts perceived as giving some wiggle room to again miss its
long-term target.
Beverages:
NESCAFE
NEQUICK
MILO
NESTLE Fruita Vitals
Bottled Water:
NESTLE Pure Life
Baby Food:
CERELAC
Food:
MAGGI-2 Minute Noodles
Break Fast Cereals:
Corn Flakes
Honey Gold Flakes
KOKO Crunch
Chocolate & Confectionary:
KIT KAT
KIT KAT Chunky
Polo
Competitors
Major product lines: Olpers milk, Olwell, Olper Cream, Tarang Tea
whitener, Tarkka Ghee
Haleeb Foods
Major product lines: Bread, snacks, desserts and meals.
Shezan Foods Pakistan
Major product lines: Food Products, Jams Jellies & Marmalades,
Tomato Ketchup, Sauces & Pickles, Fruit Juices Syrups &
Squashes
UNILEVER Pakistan
Regional
Regional
Regional
Regional
Regional
Regional
Regional
Regional
Regional
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Manager,
Manager,
Manager,
Manager,
Manager,
Manager,
Manager,
Manager,
Manager,
Faisalabad Region
Multan
Quetta
Lahore
Hyderabad
Gujranwala
Islamabad
Jhelum
Peshawar
HR Skills
Strong analytical and conceptual thinking skills; ability to
analyze data.
Administrative Structure
Marketing
And Sale
Manager
Technical
Manager
Plant
Manager
Supply Chain
Manager
Corporate
Manager
Finance
Control
Manager
Finance
Controller
Corporate
HR
Manager
Corporate
Quality Assurance
Manager
HR
Manager
Quality Assurance
Manager
National
Sale
Manager
Group
Brand
Manager
Distribution
Operations
Distributions
Services
Demand And
Supply Chain
Financial Statements
Consolidated income statement
For the year ended 31 December 2014
In millions of CHF
Sales
Other revenue
Cost of goods sold
Notes
2014
91 612
253
(47 553)
2013
92 158
215
(48 111)
(8 217)
(8 156)
(19 651)
(19 711)
(1 628)
(1 503)
110
(907)
14 019
120
(965)
14 047
154
(3 268)
10 905
616
(1 595)
13 068
Financial income
Financial expense
Profit before taxes, associates and joint ventures
Taxes
Income from associates and joint ventures
135
(772)
10 268
(3 367)
8 003
219
(850)
12 437
(3 256)
1 264
14 904
10 445
48
430
14 456
10015
As percentages of sales
Trading operating profit
15.3%
15.2%
Profit for the year attributable to shareholders of the parent (Net Profit)
15.8%
10.9%
Distribution expenses
Marketing and administration expenses
Research and development costs
16
4.54
3.14
16
4.52
3.13
Consolidated
balance sheet
before appropriations
In millions of CHF
Notes
Assets
Current assets
Cash and cash equivalents
13/17
7 448
6 415
13
6
1 433
9 172
638
8 382
7/13
13 459
565
12 206
762
Short-term investments
Inventories
Trade and other receivables
Prepayments and accrued income
2014
2013
Derivative assets
Current income tax assets
13
400
908
230
1 151
576
33 961
282
30 066
8
9
28 421
34 557
26 895
31 039
Intangible assets
Investments in associates and joint ventures
9
15
19 800
8 649
12 673
12 315
Financial assets
Employee benefits assets
Current income tax assets
Deferred tax assets
13
10
5 493
383
128
2 058
4 550
537
124
2 243
99 489
90 376
8 810
11 380
17 437
16 072
3 759
3 185
Provisions
695
523
Derivative liabilities
757
381
1 264
173
1 276
100
32 895
32 917
14
Non-current liabilities
Financial debt
12 396
10 363
8 081
6 279
Provisions
3 161
2 714
3 191
2 643
Other payables
1 842
1 387
28 671
23 386
Total liabilities
61 566
56 303
322
322
(3 918)
(2 196)
(17 255)
(20 811)
90 981
85 260
70 130
62 575
1 754
1 564
71 884
64 139
Equity
Share capital
Treasury shares
Translation reserve
Non-controlling interests
Total equity
18
2014
2013
10 905
6 323
17 228
(114)
85
17199
(356)
(2 859)
716
13 068
4 352
17 420
1 360
(574)
18 206
(351)
(3 520)
657
14 700
14 992
Capital expenditure
Expenditure on intangible assets
(3 914)
(509)
(4 928)
(402)
Acquisition of businesses
Disposal of businesses
Investments (net of divestments) in associates and joint
(a) non-current treasury investments
ventures from
Outflows
(1 986)
321
3 958
(137)
(321)
421
(28)
(244)
255
(962)
294
(392)
2 644
400
1 273
(421)
(3 072)
(1 606)
(6 863)
(356)
(6 552)
(328)
(49)
(337)
(1 721)
(481)
104
2 202
(1 969)
(1 985)
(10 637)
42
1 033
6 415
60
3 814
(2 271)
(6 063)
(12 158)
(526)
702
713
Operating profit
Non-cash items of income and expense
Cash flow before changes in operating assets and
liabilities
Decrease/(increase)
in working capital
Variation of other operating assets and liabilities
Cash generated from operations
Net cash flows from treasury activities
Taxes paid
Dividends and interest from associates and joint ventures
Notes
17
17
Translation
shares
Retained earningsReserve
andTreasury
other
reserves
Share
capital
7 448
6 415
In millions
of CHF
Equity as at 31 December 2012
Profit for the year
322
(2887)
884
(2003)
(59)
(2062)
(2887)
10899
8012
371
8383
(6552)
(328)
(328)
(612)
190
(422)
(422)
214
(39)
175
175
280
280
280
(297)
(297)
(136)
(433)
(118)
322
(6552) (6552)
372
372
14456
14456
448
14904
3556
(1764)
1792
108
1900
3556
(356) (356)
(1943)
204
(1739)
(1739)
221
(48)
173
173
(297)
(297)
(10)
(307)
(1722)
Other movements
33
33
33
Analysis Of Financial
Statements
Ratio analyses:
A tool used by individuals to conduct a quantitative analysis of information in a company's
financial statements. Ratios are calculated from current year numbers and are then compared
to previous years, other companies, the industry, or even the economy to judge the
performance of the company. Ratio analysis is predominately used by proponents of
fundamental analysis.
Liquidity ratios:
Current ratio=
2014
1.03 :1
Interpretation:
In 2013 the current ratio has increasing trend, and the nestle has the ability to pay 0.91 against 1
rupees. In 2014 the current ratio increase due to increase in current assets as compare to current
liabilities and the company have the ability to pay 1.03 against 1 rupees liability.
Quick ratio:
Quick ratio =
2014
0.75 :1
Interpretation:
The quick ratio in 2013 is 0.66:1 because nestle increase in current liabilities as compare to
the current assets , and the company have the ability to pay current assets without relying on
inventory . In 2014 the current ratio increases due to increase in current asset.
In
2013 2014
milli
ons
of
CH
F
10
2851 66
Net working capital is also another measure of the liquidity of the company. Net working capital
is the difference between the current assets and current liabilities. It is just like the current ratio
indicating either the company has enough current assets to pay its current liabilities. If the
current assets are more than the current liabilities then company has strong liquidity position
indicating it has the ability to discharge it current liabilities. Net working capital is also going
increase every year which means APL have enough cash after payment of current liabilities. So
the liquidity position is strong.
In million of
CHf
2013
2014
0.265
0.327
Interpretation
Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts.
The above ratio shows variation due to inflow or outflow of cash in business. In 2014 the ratio is
very high but in 2013 ratio is very low as compared to other years which means in 2014 Nestle
has more cash and cash equivalents but in 2013 Nestle have low cash and cash equivalents to pay
current liabilities.
Activity Analysis
Inventory Turnover
Inventory Turnover Ratio =
2013
10.99 times
Sales/Inventory
2014
9.99 times
Interpretation:
In 2014 the inventory turnover ratio reduce due to increase in inventory and inventory
converted in to sale less as compare to 2013. Inventory turnover ratio increase means inventory
is more converted into sale.
2013
10.57
2014
8.51 times
times
2014
2.12 time
Interpretation:
In 2013 the fixed assets turnover ratio is high as compare to 2014 means the
company use more fixed assets as compare to 2013.But in 2014 the ratio is reduce which show
that the company use less fixed assets to generate sales.
Cash and cash equivalents are current assets excluding inventory, prepayments and trade debts.
The above ratio shows variation due to inflow or outflow of cash in business. In 2013 the ratio is
very high but in 2014 ratio is very low as compared to other years which means in 2013 Nestle
has more cash and cash equivalents but in 2014 they have low cash and cash equivalents to pay
current liabilities.
Sales/Total Assets
2013
0.765 time
2014
0,68 time
Interpretation:
The ratio show how much total assets use to generate the sale. In 2013 the Total assets
turnover ratio is high compare to 2014 which show that the company use more fixed to generate
the sale. In 2014 the ratio reduce which show that the company generate more sale by using less
total assets and in 2013.
Solvency Ratios:
2014
30.33%
Interpretation:
In 2013 the Total debt to total assets ratio is high as compare to 2014 which show
that the 30.33% company assets are generated from the total debt. In 2014 the ratio reduce which
show that the generate more assets from less total debt compare to 2013.
Conclusion:
The company performance not bad, and still nestle is the market leader in
Pakistan but the company have more chance to increase its growth and
market share because uniliver is the big competitor and he give more
challenge in the market.
So we can say company performance is satisfactory.
Recommendations
Employees should be trained according to the changing standards of the
organization.
Company should conduct survey from time to time, according to which
changes can be introduced in the organization to stay updated in the market.
They should introduce creativity into the work, so that the employees Cando
their work active mindedly.
Employee should be given compensation in order to keep them loyal.
Employee should be more involved in decision making to become more
differentiated.
As far as the Liquidity ratios are concerned then liquidity position of nestle
is not good so the company should improve current ratio and should be able
to pay off its current liabilities in this regard the company should increase
cash and cash equivalents.