Steady domestic demand to brighten Nestle’s outlook

PETALING JAYA: A combination of lower commodity costs and steady domestic demand will continue to support Nestle (M) Bhd’s outlook amid a recovery of sentiment for the company’s brands that include Maggi and Milo.

Analysts maintained a positive stance on the company’s stock following the release of its fourth quarter ended Dec 31, 2025 (4Q25) and full-year (FY25) results last Wednesday that largely met market consensus.

The company also declared a third interim dividend of 90 sen, bringing FY25’s total dividend to RM2.20 a share.

TA Research, which has maintained a “buy” call on the stock and revised the target price (TP) to RM128 from RM125.90, expects 1Q26 revenue to improve year-on-year from seasonal demand during the Chinese New Year and Aidil Fitri festivities.

“For FY26, sales volume is projected to remain strong, underpinned by the continuation of government cash assistance, ongoing product innovations, as well as promotional campaigns and roadshows aimed at enhancing brand awareness,” the research house said.

Maybank Investment Bank Research said while 4Q25 results fell short of its expectations due to higher operating costs, the positive outlook remained intact as sales volume continued to recover to pre-boycott levels in 1Q26 due to festive spending and government cash aid.

It has maintained a “buy” call but lowered the share price to RM120 from RM122 as it lowers FY26 and FY27 earnings estimates by 2% and 8%, respectively.

It saw margin expansion in the second half of FY26 on easing inventory costs and a stronger ringgit.

Kenanga Research said the margin recovery remains gradual and would be unlikely to return to the earnings before interest, taxes, depreciation and amortisation level of 16.5% seen in FY23 despite revenue largely normalising to pre-boycott levels, which has also partly been driven by price hikes in recent years.