Introduction Nestle

Nestle (Malaysia), part of Nestle Group, is engaged in the manufacturing, marketing and sale of
food, confectionery and dairy products in Malaysia. Nestle's persistence for providing quality
products to Malaysians goes back almost 100 years ago. Since 1962, having its first factory in
Petaling Jaya, Nestle Malaysia now manufactures its products in 7 factories and operates by
reviewing the head office in Mutiara Damansara. Today, the corporation employs a lot more than
5000 people and manufactures along with markets a lot more than 300 Halal products in
Malaysia (permissible as per Muslim religion) products, reflecting Malaysias Muslim religious
beliefs, as well as exports are certified Halal by JAKIM (Jabatan Kemajuan Islam Malaysia) or
even the Department of Islamic Continuing development of Malaysia. The businesss goods are
categorized into coffee and beverages culinary aids/prepared foods, milks, liquid drinks, junior
foods, cereals, chilled dairy, ice cream, chocolate and confectionery, healthcare nutrition,
performance nutrition, and Nestle professional. Its major food products brands include MILO,
NESCAFE, MAGGI, NESPRAY, LACTOGEN and KIT KAT.

History

Nestle (Malaysia) was established by Nestle Group (Nestle) in 1912 as the Anglo-Swiss
Condensed Milk Company, operating out of Penang. By 1939, growth and expansion made a
proceed to Kuala Lumpur necessary. The Business was publicly listed on the KLSE now known
as Bursa Malaysia Berhad on 13 December, 1989. Nestle (Malaysia) disposed of its equity stake
in Food Ingredients Specialties (Malaysia), Beverage Partners Worldwide (Malaysia), Purina Pet
Care (Malaysia), and Cereal Partners (Malaysia), for you use MYR37 million (approximately
$11.one million) in 2002. The Nestle group consolidated all of its manufacturing activities into
Nestle (Malaysia), except for the confectionery operations, which remain under Nestle Asean
(Malaysia), in 2005.The corporations brand MILO FUZE introduced two new variants: MILO
FUZE 3in1 Light and MILOFUZE 3in1 Mocha in the year 2006. MILO FUZE 3in1 Light was
the initial light chocolate malt drink launched in Malaysia. In 2007, Nestle (Malaysia) announced
its intention to accumulate Henniez, is a normal water bottling and distributor company. At the
end of 2007, the company inked a partnership with Maybank and American Express to adopt
innovative B2B expense management solution. Also, Nestle applied for a strategic partnership
with Brussels-based luxury chocolate maker Pierre Marcolini. In 2008, Nestle sold 24.85% of
Alcon's issued and outstanding capital to Novartis, after which it the corporation retained near
52% of Alcon%u2019s issued capital and strive to fully consolidate Alcon. Inside the same year,
the company opened its new RM75 million (approximately $22.5 million) regional plant for non-
dairy creamer at its Shah Alam Complex in Selangor, Malaysia. In April 2009, Mr. Syed Anwar
Jamalullail was appointed because Chairman at Nestle (Malaysia) Berhad. The business
appointed Mr. Detlef Krost as its Executive Director of Technical and Production in August
2009.In October 2009, the company moved its headquarters to Surian Tower in Mutiara
Damansara.

Brands:

MILO

Nutritious Chocolate Malt Drink combines the nutritious goodness of MILO powder and milk.
As well as ACTIGEN-E and PROTOMALT, additionally, it contains CALCI-N that contains the
additional dose of calcium from milk which aids the creation of strong bones and teeth.

NESCAFE

New NESCAFE CLASSIC Instant Coffee has been enhanced using advanced coffee technology
that captures the aroma of freshly roasted pinto beans. Take advantage of the new fresh aroma
and taste to get a great will the afternoon every day.

MAGGI

-The new MAGGI BIG KARI. It's the taste all Malaysians love, now bigger plus much more
satisfying. Do it today! Bigger Pack! Bigger Satisfaction!

NESPRAY
-NESPRAY CERGAS Powdered Milk is often a valuable method to obtain protein, calcium, iron
and 4 essential vitamins. This brilliant-tasting milk is inexpensive too %u2013 so it helps to meet
your youngsterPercentu2019s daily nutritional needs has not been easier.

KIT KAT

- KIT KAT RUBIES are eliminate for those who want a break to savour the best possible life can
give. KIT KAT RUBIES are crafted using the finest ingredients. Each precious gem is layered
with rich chocolate truffle, a crispy wafer center bobs of hazelnut encased in smooth milk
chocolate.
2.0 COMPANY PROFILE
2.1 IJM CORPORATION BACKGROUND

2.1.1 History:

Resulted from your merger of three medium-sized companies on local construction company, the
IJM Corporation ended up formed. IJM Corporation was officially establish on 1983 for compete
against bigger foreign competitor with additional effectively. The company were able to gained
people trust and began to develop the reputation about the short while because of the
professionally handling construction group. Their capability is been awarded in the event the
company aggressively increases in market demanded. In year 2004, they expanded the business
on industrial producer by takeover the Concrete Product Berhad and properly diversification into
China, India and Pakistan. On April 2007, IJM purchased Road Builder Group that was their
closes competitor at that time to be able to sustain their position as among the country biggest
builder.

2.1.2 Activities:

IJM Corporation is really a professionally company manage under competency core activities
include construction, property development, manufacturing and quarrying, infrastructure
concessions and plantation. It absolutely was established and growth over the past three decade
with centering on the variation into tactically related businesses plus discerning enlargement
towards fresh market. Main offices were in Selangor with connecting to other people ten
countries on the list of world with devoted to Malaysia, China, Arab and Indonesia. IJM become
developer on property following the successfully experience of from the business. The house
group then continuously growth extensively in the year, due to that the IJM Corporation became
one of the major property developer in Malaysia including spreading cities, profitmaking
building and in addition skyscraper condominium.
2.1.3 Market strength:
The result of merger between three medium size of local construction formed a strongly
company that could be compete with the bigger size company. The developing in a growing
presence and operational in more than 10 countries with primarily focused on Malaysia ensure
the competencies’ and creates the advantages among their competitors.
Market value.

Earning Per Share(EPS)(IJM CORPORATION BERHAD)

2014 2015 2016 2017

Year
Profit After Tax 829599 480944 793587 653773

Number of shares issued 1404608 1473871 3571689 3600319

EPS(RM) 59.06 32.63 22.22 18.16
=Net Profit/Number of
shares issued

Earning Per Share(EPS)(NESTLE MALAYSIA BERHAD)

2014 2015 2016 2017

Year
Profit After Tax 550384 590733 637127 645795

Number of shares issued 234500 234500 234500 234500

EPS(RM) 234.71 251.91 271.70 275.39

=Net Profit/Number of
shares issued
Dividend Yield(IJM Corporation Berhad)

2014 2015 2016 2017

Year
Dividend(net) 181844 366821 303679 360029
Market value or 8765040 10800007 12654362 12285516
Capitalization
Dividen Yield 2.1% 3.4% 2.4% 2.9%
=Dividend(net)/market
value

Dividend Yield(Nestle Malaysia Berhad)

2014 2015 2016 2017

Year
Dividend 551075 609700 633150 644875

Market value or 16 063 500 17212300 18337900 24200400

Capitilization
Dividen Yield 3.4% 3.50% 3.50% 2.70%
=Dividend(net)/market
value
*For Nestle, market value is calculated based on total number of shares(234500) multiplied
with market value per share.

Dividend payout ratio(IJM Corporation Berhad)

2014 2015 2016 2017

Year
Dividend 181844 366821 303679 360029

Net income 1076656 713041000 881535 766804

Dividen Payout Ratio 0.17 0.51 0.34 0.47

=Dividend/Net Income
Dividend payout ratio(Nestle Malaysia Berhad)

2014 2015 2016 2017

Year
Dividend 551075 609700 633150 644875

Net income 550384 590733 633127 645795

Dividen Payout Ratio 1.00 1.03 1.00 0.99

=Dividend/Net Income
 Analysis on ratio

Earnings per share (EPS) are being thought to decide how much the share cost of the
corporation. While calculating the outstanding shares, it more better than used weighted
average numbers shares outstanding because diet plan shares can be change and
convertible. For overall four years operational from years 2014 until years 2017, the IJM
Corporation shows low earnings per share and positive. On overall the IJM Company
carries a very encouraging step up from their business. IJM Corporation stated steadily
growth for 4 years business operational. For IJM corporation the EPS starts 59.06 sen in
year 2014 and ends with 18.16 sen in year 2017.Meanwhile,for Nestle(Malaysia) the
earning per share increases from year upon year and shows steady increase for respective
four years where to the year 2014 the EPS is 234.71 and rose drastically to 275.39 in year
2017.Earning per share serves as a the gain after tax on current years divided by amount
of shares. It more usually utilized to evaluate company inside competitors underneath the
same industrial in addition to being a basis against. As possible see, the IJM Corporation
were built with a low number on year 2017 that is 18.16.This as a result of consequences
from the business where they don't generates revenue all night . losses with that year.
Earnings per share (EPS) are now being considered to see how much the share tariff of
the company. While calculating the outstanding shares, it more better than used weighted
average numbers shares outstanding because the amount of shares can easily be change
and convertible. The Viewers recorded its highest ever consolidated revenue at
RM6,065.34 million, representing an increase of 18% from RM5,128.20 million reported
in the year. Increased revenue contributed from the Construction, Property, Industry and
Plantation Divisions helped to offset lower revenue from the Infrastructure Division on
account of reduced cargo throughput with the Port operations. Pre-tax profit for the year
stood at RM1,010.01 million, a reduction in 13% in comparison to RM1,155.80 million
recently, mainly due to non-recurrence of one-off gains in the disposal of equity interests
in Indian infrastructure assets and fair value gain on re measurements of its equity
interests in Jaipur-Mahua Tollway Private Limited and Swarna Tollway Private Limited
totalling RM307.48 million which were recorded in the preceding year. This will cause
the EPS to decrease from year to year. Findings by Patel and Pitroda (2016), construction
industry is always considered as a risky business finding out about to the strategic nature,
complexity and also the nature of the business environment, activities, organization and
processes. Risk in construction has been the biggest of attention as a result of time and
cost overruns related to construction projects. Among the risks happen in construction
projects is when select the wrong contractors, that may give influence on bad money of
the project. Tulsian (2014)

For Nestle(Malaysia)company the steady increase is because delivered higher revenue of

RM5.3 billion, a 3.9% increase in comparison to the previous year. This was supported
by strong export and domestic businesses, which grew 3.4% and 4.1% respectively. On
account of prudent spending budget and efficient marketing and trade investments, Nestle
(Malaysia) Berhad and its particular band of companies (the viewers) recorded an income
before Tax of RM814 million and Profit after Tax of RM646 million, an increase of 6.2%
and 1.4% respectively for your financial year ended 31 December 2017.
Dividend yield is only one of many factors you should consider when analyzing a company
stock,Ahmed.H.et.al(2009) The dividend payout ratio would be the next most important factor as
it is the connection, and in many ways the antithesis (a contrast or opposition between two
things), of the dividend yield. The dividend payout ratio indicates the percentage of profits (or
cash flow) the company is paying in dividends, Musa,I.F(2009). Ideally an investor wants a high
dividend yield and a low dividend payout ratio. The least favorable situation would be a low
dividend yield and a high payout ratio. In most situations they are correlated. In other words as a
general rule, high yielding stocks are paying a large percentage of their earnings or cash flow in
dividends, and low yielding stocks are paying a smaller percentage of their earnings or cash flow
out in dividends. A fast growing company might choose to reinvest its profits for future growth
and allocate less cash to dividends. Everything else being equal this company might experience
faster future growth to compensate for a lower dividend yield. A mature stable company might
not require as much capital investment and choose to pay a higher percentage of its profits or
cash flow in dividends. Everything else being equal this company might experience slower future
growth but provide a higher dividend yield today.

For IJM the dividend yield is unsteady for the continuous 4 years where for year 2014 is 2.1%
and increases to 3.4% in year 2015 and dropped back to 2.4% in year 2016 and slightly increase
to 2.9% in year 2017.Meanwhile the dividend payout ratio shows a drastic increase from 17% in
year 2014 to 47% in year 2017.There is relationship between net income and total dividend
declared for the respective year. When net profit increases but total dividend declared is minus
the dividend payout ratio decreases. Vid way chosen by IJM corporation to reinvest in
infrastructure division as its net gain is small. This explain the lowering of dividend yield also.

Whereas for Nestle(Malaysia)company,less 100% payout level, or about RM234.71 per share,
still means a good 3.4% net yield.. Rogues reported 2014 earnings results that have been broadly
in line with market expectations, underlining the business relative resilience. Net profit, however,
grew an outsized to RM550.4 million, bolstered by stable raw material prices and price savings.
As expected, Nestle too maintained its high payout ratio, with dividends totaling RM 251.91 per
share or similar to 99% of net gain in year 2015, there's ample room for even more leverage, if
needed. Thus, despite likely higher capex this coming year, to help expand capacity, we presume
Nestle help keep its dividend payout level steady. Dividends are estimated at RM 275.39 per
share, translating into net yield of 103 % .

Stocks that pay steady dividends will almost always be appealing to investors , Rafique,M
(2012). This sort of more risk averse, high dividend payout levels and yields often provide good
support to share prices amid short-term market volatility. The outsized earnings growth relative
to sales which increased by some 28% in the same period was related to a combination of
factors, including concentrating on key growth products, using a more favorable sales mix
(exiting through the low margin creamer business), and enjoying economies of scale as well as
spending budget.
Conclusion& Recommendations

In line with the analysis that had been completed, we learned the Nestle carries a better
performance together a steadily growth compare to the . It may be prove by comparing test that
being perform both for companies. As you may know, with the early on the Nestle is having
difficulty in generating revenues all night losses, they prove the corporation could manage and
fosters competitive among the same industrial. Moreover, the Nestle(Malaysia)Berhad is better
because of the financial strategies and fosters potential chance to keep profit stability. Despite
beating the marketplace expectation, the Nestle reflect though market conditions and pressures to
attain goals. For this, Nestle has evolved and dedicated to the customer retention as well as
conduct a research to understand well about their strength and weakness. The info in the
company survival may be knows through the annual report of the company.

Recommendation depending on the analysis that was performed, each company that run a small
business should create a culture of trust, Ramli,et.al(2012). The bona fide communication could
diminish differences among team workers and improves the transparency among bottom and top
line workers. This could lead to improvement and efficiency of workers so then the performance
of company also could possibly be surge. Thus the outsider including investors drawn to this
company that have great culture values most notable. Secondly, the corporation should be aware
toward becoming the very best in school as benchmarking toward other competitor. This can
enhance the company goals and vision toward more efficient and place an attempt by using the
ultimate way being favorable company in the market.
References

Ahmed, H. & Javid, A., “Dynamics and determinants of dividend policy in Pakistan: evidence
from Karachi stock exchange non-financial firms,” International Journal of Finance and
Economics, 25, (2009):148-171

Musa, I. F., “The dividend policy of firms quoted on the Nigerian stock exchange: An empirical
analysis,” African Journal of Business Management, 3(10), (2009): 555-566. Retrieved from
http://www.academicjournals.org/journal/AJBM/article-full-text-pdf/93C42D918307

Pitroda, M. P. (2016). The factors affecting project managers‟ Perspective in risk

management of residential construction projects in Gujarat. International Research journal of
Finance and Economics.

Rafique, M., “Factors affecting dividend payout: Evidence from listed non-financial firms of
Karachi stock exchange,” Business Management Dynamics, 1(11), (2012): 76-92

Tulsian, D. M. (2014). Profitability Analysis (A comparative study of SAIL & TATA.

IOSR Journal of Economics and Finance (IOSR-JEF)
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