NESTLE 2021-22 Annual Report Analysis

Sat, 31 Dec

NESTLE has announced its results for the year ended December 2022. Let us have a look at the detailed performance review of the company during FY21-22.

NESTLE Income Statement Analysis

• Operating income during the year rose 14.6% on a year-on-year (YoY) basis.
• The company's operating profit increased by 11.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 21.9% in CY22 as against 22.6% in CY21.
• Depreciation charges increased by 3.1% and finance costs decreased by 23.4% YoY, respectively.
• Other income declined by 13.6% YoY.
• Net profit for the year grew by 12.8% YoY.
• Net profit margins during the year declined from 14.4% in CY21 to 14.1% in CY22.

NESTLE Income Statement 2021-22

No. of Mths Year Ending		12 Dec-21*	12 Dec-22*	% Change
Net Sales	Rs m	147,406	168,970	14.6%
Other income	Rs m	1,241	1,073	-13.6%
Total Revenues	Rs m	148,647	170,042	14.4%
Gross profit	Rs m	33,259	37,063	11.4%
Depreciation	Rs m	3,910	4,030	3.1%
Interest	Rs m	2,017	1,546	-23.4%
Profit before tax	Rs m	28,573	32,560	14.0%
Tax	Rs m	7,389	8,655	17.1%
Profit after tax	Rs m	21,184	23,905	12.8%
Gross profit margin	%	22.6	21.9
Effective tax rate	%	25.9	26.6
Net profit margin	%	14.4	14.1

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NESTLE Balance Sheet Analysis

• The company's current liabilities during CY22 stood at Rs 31 billion as compared to Rs 28 billion in CY21, thereby witnessing an increase of 11.4%.
• Long-term debt down at Rs 267 million as compared to Rs 275 million during CY21, a fall of 2.9%.
• Current assets rose 26% and stood at Rs 35 billion, while fixed assets rose 0% and stood at Rs 55 billion in CY22.
• Overall, the total assets and liabilities for CY22 stood at Rs 90 billion as against Rs 82 billion during CY21, thereby witnessing a growth of 9%.

NESTLE Balance Sheet as on December 2022

No. of Mths Year Ending		12 Dec-21*	12 Dec-22*	% Change
Networth	Rs m	19,464	24,592	26.3
Current Liabilities	Rs m	27,647	30,798	11.4
Long-term Debt	Rs m	275	267	-2.9
Total Liabilities	Rs m	82,083	89,531	9.1
Current assets	Rs m	27,622	34,902	26.4
Fixed Assets	Rs m	54,461	54,630	0.3
Total Assets	Rs m	82,083	89,531	9.1

NESTLE Cash Flow Statement Analysis

• NESTLE's cash flow from operating activities (CFO) during CY22 stood at Rs 27 billion, an improvement of 22.4% on a YoY basis.
• Cash flow from investing activities (CFI) during CY22 stood at Rs -4 billion on a YoY basis.
• Cash flow from financial activities (CFF) during CY22 stood at Rs -21 billion on a YoY basis.
• Overall, net cash flows for the company during CY22 stood at Rs 2 billion from the Rs -17 billion net cash flows seen during CY21.

NESTLE Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Dec-21	Dec-22
Cash Flow from Operating Activities	Rs m	22,360	27,374	22.4%
Cash Flow from Investing Activities	Rs m	-19,203	-3,917	-
Cash Flow from Financing Activities	Rs m	-20,200	-21,227	-
Net Cash Flow	Rs m	-17,043	2,230	-

Current Valuations for NESTLE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 247.9, an improvement from the EPS of Rs 219.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 19,598.8, stands at 78.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 76.8 times, while the price to sales ratio stands at 11.2 times.
• The company's price to cash flow (P/CF) ratio stood at 63.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Dec-21*	12 Dec-22*
Sales per share (Unadj.)	Rs	1,528.8	1,752.4
TTM Earnings per share	Rs	219.7	247.9
Diluted earnings per share	Rs	219.7	247.9
Price to Cash Flow	x	75.7	63.9
TTM P/E ratio	x	88.9	78.5
Price / Book Value ratio	x	90.4	72.6
Market Cap	Rs m	1,759,584	1,786,245
Dividends per share (Unadj.)	Rs	200.0	220.0

Ratio Analysis for NESTLE

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.1x during CY22, from 1.0x during CY21. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 22.1x during CY22, from 15.2x during CY21. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 97.2% during CY22, from 108.8% during CY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 137.2% during CY22, from 155.0% during CY21. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 28.4% during CY22, from 28.3% during CY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Dec-21*	12 Dec-22*
Current ratio	x	1.0	1.1
Debtors’ Days	Days	4	4
Interest coverage	x	15.2	22.1
Debt to equity ratio	x	0.0	0.0
Return on assets	%	28.3	28.4
Return on equity	%	108.8	97.2
Return on capital employed	%	155.0	137.2

To see how NESTLE has performed over the last 5 years, please visit here.

NESTLE Share Price Performance

Over the last one year, NESTLE share price has moved up from Rs 17,170.3 to Rs 17,376.8, registering a gain of Rs 206.6 or around 1.2%.

Overall, the S&P BSE SENSEX is up 16.8% over the year.

(To know more, check out historical annual results for NESTLE and quarterly results for NESTLE)