Subject Name

Analysis of Financial Statement

Project on
Nestle Pakistan Limited
Department Name
Management Science
Submitted To
Ms .Maryam Farooq
Submitted By
Name: Zuhaib Sultan
Class: MBA 4th SEM
Roll No: L-11984
Shift: Evening
Submitted Date
23 May 2017
Executive summary

Nestle has been serving this world for over one hundred and thirty 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 MILKPAK 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.
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Introduction of Nestl Pakistan Limited

Nestl Pakistan Limited started its working in Pakistan when its parent company,
Switzerland based Nestl-SA first acquired shares of Milkpak limited in 1988 and then
fully taken the control of Milkpak limited in 1992. Over the years, Nestl has emerged as
leading FMCG of Pakistan which is manufacturing, processing and selling food products
including imported products (dairy, confectionary, culinary, coffee, beverages, infant
nutrition and drinking water). Main brands of Nestl are Milkpak UHT Milk, Everyday,
Nido, Nescafe, Nestl Pure Life, Cerelac,

Nestl Pakistan limited is a public limited company and its shares are quoted on
Pakistan Stock Exchange (previously on Karachi and Lahore Stock Exchanges). Nestl
has 45,349,584 numbers of common shares outstanding and its does not have
preferred stocks. Nestl per share selling price was PKR. 7800 in 2015.

Financial performance of Nestl Pakistan has been generally good over the last several
years and net sales, net profit, earnings per share, return on investment, and return on
equity has shown increasing trend. For investors point of view, Nestl is paying very
good dividends to its shareholders. In 2015, Nestl paid PKR. 190 as dividend which is
98% of EPS. Overall, Nestl has shown growth but in 2012, its net profit, earnings per
share, dividend payout ratio and others has declined in spite of the fact that its overall
sales increased. The reason was high inflation and high interest rates which has
increased the CGS significantly therefore overall profitability of the company declined.
Declined.

This report analyses last seven years financial statements of Nestl Pakistan limited
from 2009 to 2015. For analysis purpose, annual reports are downloaded from Nestl
Pakistan limited official website.
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Vision
Nestls global vision is to be the recognized leading Nutrition, Health and Wellness
Company. Nestl Pakistan subscribes fully to this vision of being the number one
Nutrition, Health, and Wellness Company in Pakistan. In particular, we envision to;

Lead a dynamic, passionate and professional workforce proud of our heritage

and positive about the future.
Meet the nutrition needs of consumers of all ages from infancy to old age, from
nutrition to pleasure, through an innovative portfolio of branded food and
beverage products of the highest quality.
Deliver shareholder value through profitable long-term growth, while continuing to
play a significant and responsible role in the Social, Economic, and
Environmental sectors of Pakistan.

Mission
Nestl is dedicated to providing the best foods to people throughout their day,
throughout their lives, throughout the world. With our unique experience of anticipating
consumers needs and creating solutions, Nestl contributes to your well-being and
enhances your quality of life.

Goals and Objectives

The goals and objectives of Nestl Pakistan are simple and well designed with the core
strategies to meet the demand of the consumers and to fulfill the needs of the
customers. Following are the main goals and;
1. To be, the best and quality providing brand among other brands in Pakistan.
2. To fulfill customers needs and requirements.
3. To capture its desired market share.
4. To dwell into the life of people and consumers.
5. To boost up its sales.
6. To create value for customer.
7. To keep the loyalty of customer with Nestl.
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8. To be the top nutrition company of Pakistan.
9. To be the leading FMCG company around the world as well as in Pakistan.
10. It aims to be the socially responsible and helping company in bad times.
11. Nestl aims to be proactive innovation and renovation culture, which is the key to
Nestls success in the marketplace.
12. Nestl aims to have fully integrated systems with suppliers & retailers so that
every single market can be tapped & focused.

Philosophy of Nestle
Nestls philosophy is summed up in four words:

Good Food, Good Life

In their quest to become the world's leading health, nutrition and wellness company,
they do everything they can to help people live more fulfilling lives.

Good Food, Good Life

Henri Nestl chose his own coat of arms to represent the company's philosophy:
a bird's nest, with a mother feeding her young.
The image represents Nestl core values: care, family values, nutrition, healthy
growth, safety and comfort. It is a guarantee of quality and a commitment to
responsibilities as a food company and experts in nutrition.
Over the years Nestl has reaffirmed its commitment to wellness, helping consumers to
live longer, healthier, and more productive lives, no matter their
age, gender or socioeconomic status.

Competitors:
Engro Foods Pakistan
Major product lines: Olpers milk, Olwell, Olper Cream, Tarang Tea whitener, Tarkka
Ghee
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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

Organization Chart
CHAIRMAN
P.Barbeck-
letmathe

CEO
P.Bulcke
Corporate Corporate Pharma &
governance communications cosmetics HR
D.P FRICK R.Ramsauer F.Castaner

Operations Finance & SBUs marketing Innovation technology

J.Lopez control &sales & R&D
J.Singh W.Bauer W.Bauer

Nestle nutrition Nestle waters Nestle Professional

R.T.Laube J.J.Harris M.Caira

Zone EUR: EUROPE Zone AOA: Zone AMS: Americas

L.Freixe ASIA/AFRICA L.Cantarell
F.Van Dijk
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Registered and Corporate Offices in Pakistan

308 Upper Mall, Lahore

+92 042 111.637.853
+92 042 578 9303
+92 042 578 9304
Corporate Office Annex
304 Upper Mall, Lahore
+92 042 111.637.853
Park Lane Tower
72-Tufail Road, Lahore Cantt
Lahore
+92 042 609 9300
Sheikhupura Factory
29thK.M.Lahore-Sheikhupura Road, Sheikhupura
+92 056 340 6615-25
+92 042 636 8710
Kabirwala Factory
Kabirwala Road, Kabirwala, District Khanewal
+92 065 111.637.853
+92 065 241 1432
Islamabad Factory (Water)
Plot no. 32, Street 3; Sector 1 10/3, Islamabad
+92 051 444 5991-3
+92 051 444 5997
Karachi Factory (Water)
23-A, North Western Industrial State, Port Qasim Authority, Karachi
+92 021 472 0151-3
+92 021 472 0154
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SWOT Analysis

Strengths
Companys name Nestle specifies the quality image high standard and quality
product
Loyalty from customers is also the major strength for the company
Employees are also loyal due to the decentralized culture of the company
People trust on products due to proper health and safety measures
The strength of Nestle confectionary is its imported chocolates and candies, which
strengthens its image
Being a multinational company it has the capability to attract more customers than
the local companies
Company has the ability to compete in a dynamic environment
Company always adapt the new technology

Weaknesses
There is not much margins for retailers to prefer its sales.
They need to improve the facilities like chillers.
The distribution cost is high as compared to the competition in the local market.
Company mostly advertises its milk products, advertisement of confectionary
products is not so better.

Opportunities
They have an opportunity to expand or capture the market by adding its product line.
They have the opportunity to offer snacks.
They can also capture the market of home appliances.
Company can open separate stores to eliminate retailers.
 Recently, they have created an opportunity for themselves by introducing chillers in
the market.
7
Company is trying to open stores in universities.
They can provide incentives to retailers to increase sales volume.
Company can enter in ice cream products

Threats
Existing companies are increasing their product lines that can prove to be a threat in
the coming years.
Company like Cadbury is giving more discounts to retailers as compared to
distributors due to which retailers prefer its products for sale.
As compared to the local competitors, our distributor cost is very high. As Nestl
confectionary Products has to maintain and obey the Nestl standards.
Some companies are competing on the basis of cost.