KUALA LUMPUR (Dec 4): Nestlé (M) Bhd's (Nestlé Malaysia) shares dropped 5.67% on Monday to an intra-day low of RM113.20, its lowest in five years.

At market close, the counter pared losses, but was still down RM6.10 or 5.08% at RM113.90, with 273,500 shares traded. These levels were last seen back in March 2018.

Shares in the food and beverage group began its decline last week, falling RM11.50 or 9.17% from RM125.40 on Thursday.

In a brief note on Monday, MIDF Research suggests that Nestle’s products have been impacted by the ongoing boycott campaign in Malaysia related to the Israel-Hamas conflict in Gaza.

For the period spanning Oct 7 to Nov 24, MIDF said that 7-Eleven Malaysia Holdings Bhd observed a 5% to 10% drop in sales for Nestlé Malaysia products, while data from low-price supermarket Econsave noted a 10% decrease.

“We anticipate an impact on Nestlé Malaysia product demand for the fourth quarter ended Dec 31, 2023 (4QFY2023),” it added.

MIDF maintained its “neutral” call on the stock with a target price of RM129.79.

When contacted by The Edge, Nestlé Malaysia did not comment directly on the alleged boycott, but noted that the group is a Swiss global company that has been operating in Malaysia for over 11 decades.

“Our products are 100% halal and manufactured in Malaysia. We are operating normally and we remain focused on our mission of providing high-quality foods and beverages that best meet the taste and expectations of Malaysians under trusted and well-loved brands,” it added.

For 3QFY2023, Nestlé Malaysia’s net profit rose 18.7% to RM133.7 million from RM112.65 million a year earlier, in line with 5.3% topline growth to RM1.77 billion from RM1.68 billion. 

The rise in earnings was supported by sales growth, internal efficiencies and saving initiatives to offset the impact of volatile commodity prices and unfavourable foreign exchange rates.

However, on a quarter-on-quarter basis, this was Nestlé Malaysia's second consecutive quarter with a decline in earnings.

In recent months, analysts opined that the group is facing softer consumer sentiment in tandem with input cost pressure.

Nestlé Malaysia is 72.61%-owned by Swiss-based food giant Société Des Produits Nestlé SA (Nestlé). 

According to Nestlé’s 2022 annual report, the group owns five companies in Israel.

https://www.theedgemarkets.com/node/692618