1

1. Overview of Food and Beverage Industry

1.1. Evolution of Food and Beverage Industry in Malaysia
Malaysias food industry is as diverse as the multi-cultures of Malaysia, with a wide
range of processed food with Asian twist. Between late 1980s and early 1990s, the strong
economic growth has contributed to major changes in consumer purchases and consumption
patterns in Malaysia. Malaysians living in urban areas are relatively brand conscious, and they
prefer to shop in stores. This gives them the convenience and good product selection of what
they want. The changes of lifestyle have also led to an increase in the demand for convenience
food and health food.
The food processing industry is predominantly Malaysian-owned. Today, Small and
medium enterprises have represented more than 80% of the total number of establishments in the
processed food segment. In line with the government's emphasis on agriculture sector, the
processed food and beverage industry had become an important component of the agro-based
industry. The food processing industry contributed about 10% of the Malaysian manufacturing
output in 2010.
1.2. Current of Food and Beverage Industry
Today, the demand for halal foods by Malaysian consumers has increased over the years.
The expectation of the halal food products have extended from meat products to non-meat based
products such as snacks, dairy and etc. Halal is fast becoming recognized as a new benchmark
for quality, hygiene and safety. In Malaysia, having halal certificates are value added to its food
products and ingredients. Besides, with the emphasis given by the Government to promote
Malaysia as an international halal hub, the halal food industry is ensuring its prospects.
Concurrently, it is a new trend that many Malaysians shift towards a healthier diet and
lifestyle. The Malaysia government has run several healthy eating campaigns to amplify health
concern trend. With the increasing consumer awareness in nutrition value and food fortification
for healthcare has created the demand for fresh food, organic food and nature food flavours from
plants and seafood. Other than that, the government has also taken the necessary steps in
reducing the consumption of sugar to overcome the obesity and diabetes in Malaysia. Muslim
Consumers Association of Malaysia secretary-general said that the reduction in sugar subsidy
would encourage Malaysians to practise a healthier lifestyle (M. Osman, 2012). Besides, a
2

reduction in subsidy for sugar, in stages, could reduce the consumption of sugar in their daily
meals (S. Subramaniam, 2013).
1.3. Competitiveness of this industry in Malaysia
The halal industry in Malaysia provides potential opportunities for Malaysian
manufacturers. The concept of halal is associated with the food products which are of high
quality in terms of cleanliness, sanitation and compliance with religious requirements. Malaysia
has proven itself highly qualified to lead the global halal food industry. The fact that the United
Nations has cited Malaysia as the worlds best example of benchmarking of halal food in
accordance with the Codex general guidelines in 1997 affirms Malaysias leading role in the
global halal food industry.
As the consumer concerns on health and convenience, it forces the food and beverage
industry to change their customized formulations in the food ingredients. In Malaysia, health
food produced is mainly in the form of food products that are enriched. Food ingredients such as
natural food additives and flavours have the potential for further growth in the industry. Besides,
the leading producers of packaged food in Malaysia are expected to continue strengthening their
competitive edge through the introduction of healthy and convenient products.















3

2. Company Business Description
2.1. Roti Xiang Huat Bhd
Roti Xiang Huat Bhd first started as a small in-store bakery at Jalan Ipoh in 1993,
producing variety bread with the help of experienced Malaysia, Soo Ann Siang, who had 28
years experience in the bakery business.Roti Xiang Huat Bhd range of products grew and
evolved through the years, becoming better with each step. Leveraging on its brand strength,
Roti Xiang Huat Bhd now produces a variety of baked products to satisfy consumers'
demands.
It offers a wide array of superior bakery products including white, wheat and health
breads, flavoured loaves and snack items like snack cakes, muffins and toasts. Roti Xiang
Huats breads are known for their good taste, softness, freshness, nutritive value and oven-
baked aroma. The popular Classic White Bread is zero cholesterol and bromated free, has
zero Transfat, and is mineral fortified and vitamin, exceeding DOH recommendations.
The competitive advantages of Roti Xiang Huats bread include better bread formulation,
storage, choice and manufacturing, storage hygiene standards and distribution. It's no
accident Roti Xiang Huats bread does not go mouldy quickly or easily. New industry
standards and systems had to be set up and staff recruited and trained for ISO and Halal
certification. Free market competition and true entrepreneurship, like genius, is all about 90%
perspiration and 10% inspiration.
In the future prospect, Roti Xiang Huat Bhd is focused on product expansion and
improvement of distribution efficiency to ensure that only fresh breads reach consumers
every day. Roti Xiang Huat Bhd needs to strictly follow its international policy of keeping
only fresh stocks on the store shelves. When the products come out of the factory, the
delivery vans leave the production plant as early as 4 oclock in the morning to bring the
products to specific locations. Replacing unsold breads in store shelves with only freshly
baked top-quality products during each day of delivery.
Roti Xiang Huat Bhd also plans to take over a desired company to expand their business
in the future rather than build another business originally. That is because taking over a
company can increase its market share or to achieve economies of scale that can help to
reduce its costs and thereby increase its profits. It also can boost revenue streams and market
4

share, broaden product base and increase the international presence through the taking over
companies.
Other than that, Roti Xiang Huat Bhd is going to launch user-friendly web interface
because nowadays consumers are searching information about the companies from internet
after they heard the radio advertisement. Thus, a success business should maintain a user-
friendly web interface that provide valuable information for the consumers and preferred if it
may provide multiple languages that satisfies the needs of global customers.
With the special services and differentiate products provided, Roti Xiang Huat Bhd is
looking forward to serve the market with a new and different breads enjoying experience,
which may bring higher revenue and better market share for the Roti Xiang Huat Bhd.

2.2. Targeted
2.2.1 Fraser & Neave Holdings Bhd
Fraser Neave Holding Bhd (F&N) was incorporated at year 1883 when founders John Fraser
and David Chalmers Neave formed a company named Singapore Straits Aerated Water
Company in Singapore. After few years, F&N was consolidated and enter the food beverage
industry. It has its own vision to become the leading total beverage company in Malaysia and the
region and their mission is to be a world-class multinational enterprise providing superior returns
to their shareholders, a rewarding career for their employees and excellent value for their
customers. (fn, 2011)
F&N was founded in 1961 and based in Kuala Lumpur, Malaysia. It is listed on Bursa
Malaysia under the Main Market. It have many subsidiaries and they are engaged in the
manufacture and sale of soft drinks, glass container, dairy products, property development
activities and the provision of management services. The Company operates in three segments
which are soft drinks, dairy products and others. The Company's dairy products brands include
F&N Sweetened Condensed Milk, Tea Pot, Cap Junjung, Ideal, F&N Evaporated Milk and
Carnation brands of condensed & evaporated milk. The Company's soft drinks portfolio consists
of brands, such as F&N Fun Flavours, 100PLUS, F&N SEASONS, F&N Ice Mountain, F&N
Fruit Tree and the newly-launched OISHI Green Tea. (fn, 2011)
The competitive advantage of F&N is they produce high quality of canned milk. It gains
excellent reputation in Malaysia and this product is largely use as beverage mixers in coffee,
5

chocolate drinks and tea and now canned milk has successfully been exported to more than 20
countries around the world. Besides that, the halal certification offers strong reassurance to
Muslim customers in the growing Halal markets in Malaysia.
In the future prospect, Fraser & Neave Holdings Bhd will kick-start its planned property
project in Petaling Jaya with the launch of 900 units of serviced apartments worth RM560
million in the fourth quarter of this year according to THE STAR ONLINE. F&N chief financial
officer Soon Wing Chong said that the entire integrated residential and commercial development
will take five to six years to complete. This project is joint venture between F&N and Singapore-
based FCL Centrepoint Pte Ltd. (SHAN)
Other than that, the chief executive officer Somsak Chayapong said it was targeting to
double revenue from its exports, especially to neighbouring countries which it already had a
presence in. Exports contribute 15% to its top line currently and he expects the number to grow
in the next five years to between 25% and 30% by strengthening its foothold in markets like the
Philippines and Indonesia. This marked a beginning of an era of more success as F&N Holding
Bhd continues to grow from strength to strength in todays highly competitive economic
landscape.

2.2.2 Nestl (Malaysia) Bhd
Nestl Company was founded in 1866 by Henri Nestl and is today the world's biggest
food and beverage company. The history of Nestl began in Switzerland in 1867 when Henri
Nestl, a pharmacist who launched his product Farine Lactee Nestl which is a nutritious gruel
for children. Henri used his surname, which means little nest, in both of the company name and
the logotype. The nest, which means security, nourishment and family, still plays a central role in
Nestls profile. (History)
Nestl Company was listed on the Bursa Malaysia in 1989. Nestl Company has two
segments which are beverages and foods and others, which include Nutrition and Nestl
Professional. Nestls products are categorized into coffee and beverages, culinary prepared
foods, junior foods, liquid drinks, milks, breakfast cereals, chocolate, chilled dairy, ice cream,
and confectionery, performance nutrition, healthcare nutrition and Nestl professional. Nestl
produce several brands, name Milo, Nescafe, Maggie, etc.
6

The competitive advantage of Nestl is the company has a strong Research and
Development operations that helps the company to achieve cross-border synergy such as
packaging its global products to local preferences. Nestl also emphasizes on using todays
information technology that Nestl believe it can present a long-term opportunity for them to
smoothen the companys operation or to increase efficiency in packaging, compare with other
companys operations. (nestle)
Besides, Nestl also has better technological capability to renovate the existing products
to be higher quality, more innovative and much healthier product as Nestl realized that
consumer-centred innovation and renovation is the most important pillar of Nestls worldwide
strategy which will accelerate Nestl to advance from good to better.
In the future prospect, Nestl (M) Bhd managing director Alois Hofbauer said Nestl plan
to produce more innovative food products. He said earnings driver would come from three
directions, which are continued growth from its innovative products, existing products and
export markets. He adds that Nestl will continue to grow and produce more innovative products
for example like its Milo, Nescafe and Maggie noodles. (thestar)
Other than that, Nestl is expected to add more manufacturing capacities in its plant in
Chembong in Negeri Sembilan. It is also working on details on setting up a manufacturing plant
adjacent to its Shah Alam plant. Hofbauer said the groups new plant would begin
commercialization in the first half of 2014. He also wants to add new plant in Shah Alam which
would be mainly for liquid drink products.
Nestl exerts great efforts to achieve its visions to be the leader in Health, Nutrition and
Wellness Company by producing better quality of products to the consumers. Nestl is also
doing research about the consumers needs from time to time and satisfy the consumers. Nestls
strengths such as effective strategic marketing capability, high financial capability, strong
research and development, great leaderships have helped them through the obstacles. Nestl
focuses on its missions and ensures consistency by making the right decisions to manage and
build its business to deliver the promise of Good Food, Good Life all over the world.




7

3.0 Evaluation of Targeted Companies Financial Performances
Computation of Ratio (Remarks: All calculations are located in Appendix)
3.1.1 Fraser & Neave Holdings Bhd
Profitability Ratio


Year
Ratios 2011 2012 2013
Gross Profit Margin: 30.70% 27.38% 29.52%
Net Profit Margin: 11.38% 7.28% 9.05%
Return on Capital Employed: 25.34% 14.68% 17.04%

Efficiency Ratio


Year
Ratios 2011 2012 2013
Asset Turnover: 2.227 times 2.016 times 1.884 times
Fixed Asset Turnover: 3.881 times 3.015 times 3.292 times
Inventory Turnover Days: 44.28 days 53.19 days 53.21 days

Liquidity Ratio


Year
Ratios 2011 2012 2013
Current Ratio: 1.7 : 1 1.12 : 1 1.45 : 1
Acid Test Ratio: 1.26 : 1 0.75 : 1 1.06 : 1
Trade Debtor Days: 43.39 days 44.85 days 42.98 days
Trade Creditor Days: 32.75 days 30.31 days 30.72 days

Investment Returns Ratio


Year
Ratios 2011 2012 2013
Dividend yield: 11.09% 4.505% 3.118%
Basic Earnings per share (EPS): RM 1.029 RM 0.759 RM 0.717
Dividend cover: 0.75 times 1.226 times 1.648 times
Price / Earnings: 16.035 times 23.98 times 25.94 times
Gearing (Capital Structure) Ratio


Year
Ratios 2011 2012 2013
Debt ratio: 0.37 : 1 0.4 : 1 0.4 : 1
Capital Gearing ratio: 0.09 : 1 - 0.08 : 1
Debt To Equity Ratio: 0.1 : 1 - 0.09 : 1
Interest cover: 39 times 20.39 times 22.80 times
8

3.1.2. Interpretation of Financial Performance
Remarks: All graphs/charts are located in Appendix

Net Profit Margin
The line chart (Figure 1) shows the probability of net profit margin among the 3 years. In year
2011, Fraser and Neave (F&N) has 11.38% of net profit margin. However, the net profit margin
dropped seriously to 7.28% in year 2012. F&N Limited in Singapore claimed that the lower
profit was mainly due to lower recognition of Development Property earnings as a result of a
change in accounting standards and one-off gains in year 2011 not repeated that year. Besides,
the decline in performance due to the cessation of the Coca-cola business, flood disruptions in
Thailand and higher raw material costs and competitive pressures in the Malaysian dairy
operations also are the affecting reasons. In year 2013, the net profit margin raised back to
9.05%. This is due to the leading positions of their soft drinks in the ready-to-drink segments of
Singapore and Malaysia.

Return on Capital Employed
The bar chart (Figure 2) shows the probability of return on capital employed from 2011 to 2013.
In year 2011, Fraser & Neave (F&N) has 25.34% of return of capital employed. Higher return on
capital employed indicated that F&N is employing its capital effectively and generating
shareholder value. They did optimize their capital allocation on development property and
commercial property. In year 2012, return on capital employed dropped to 14.68%. It is because
proposed cash distribution of approximately $4.0 billion by way of capital reduction of one for
every three F&N shares was not carried. However, there is only a slightly increase of return on
capital employed to 17.04% in year 2013.

Acid Test Ratio
Bar chart (Figure 3) shows the ratio of acid test ratio from year 2011 to year 2013. Acid test ratio
is used to determine whether a firm has enough assets to cover its current liabilities without
selling the inventory it has on hand. If a firm has an acid test ratio that is less than 1, it means
that the firms current assets are unable to pay its current liabilities. In year 2011 and 2013, the
acid test ratio of Fraser and Neave (F&N) are 1.26 and 1.06 which is above 1, it means they can
9

cover their current liabilities without selling their inventory. However, F&N has an acid test ratio
of 0.75 which is below than 1 in year 2013. It is because MTN and CP of up to RM1, 000 million
was issued in 2008 by a wholly subsidiary of F&N to fund capital expenditure and refinance the
existing bank borrowing of the Group. Besides, F&N Dairies (Thailand) Limited, a wholly
owned subsidiary of the Company, has got an unsecured (?)

Dividend yield
The line chart (Figure 4) shows the dividend yield from year 2011 to year 2013. In year 2011,
Fraser and Neave (F&N) company has its highest dividend yield, compared to year 2011 and
2013. The reason is the Board recommends a final ordinary of 12.0 cents per share and after the
shareholders approved, the total distribution for the year will be 18.0 cents per share,
representing a raise of 6% over year 2010, where it became the highest dividend paid by the
company to date. In year 2012 and year 2013, the dividend yield of the company dropped
consequently. It is due to the decline in performance due to the cessation of the Coca-Cola
business, flood disruptions in Thailand and higher raw material costs and competitive pressures
in Malaysian dairy operations.

Dividend Cover
The chart (Figure 5) shows the dividend cover of Fraser and Neave (F&N) company between
year 2011 and year 2013. Dividend cover measures of a firm's ability to pay its dividend, the
higher the cover, the greater the possibility of earning the dividend. In year 2011, the dividend
cover of F&N Bhd is 0.75 times. Moreover, the dividends cover in year 2012 and year 2013
increase consequently to 1.226 times and to 1.648 times. It is because there is a capital reduction
approved by the shareholders of the company.

Price/ Earnings
Bar chart in Figure 6 shows the price-earnings ratio of Fraser and Neave (F&N) company from
year 2011 to year 2013. In year 2011, the price-earnings ratio of F&N Bhd is 16.035 times.
However, the price-earnings ratio is increased to 23.98 times in year 2012. The reason is F&N
company consistent leading market shares across various products have led to F&N being
conferred numerous brand awards. For example, In Malaysia, F&N maintained its leadership
10

position of the sweetened condensed milk and evaporated milk categories to take majority
market shares. Moreover, the price-earnings ratio increased slightly to 25.94 times in year 2013.

Interest Cover
This chart presents the interest cover of Fraser and Neave (F&N) Company from year 2011 to
year 2013. In year 2011, F&N has the interest cover of 39 times. However, the interest cover
dropped to 20.39 times in year 2012. It is because F&N faced the decline in performance to the
end of the Coca-Cola business and 7 months of flood disruptions in Thailand. Other than that,
higher raw material costs and competitive pressures in the Malaysian dairy operations are also
one of the reasons that affect the net profit before tax and interest. In year 2013, interest cover of
F&N slightly increased to 22.8 times since the net profit before interest also increased.

3.2. Nestl (M) Bhd
3.2.1. Computation of Ratios
Profitability Ratio


Year
Ratios 2011 2012 2013
Gross Profit Margin: 32.80% 34.09% 35.38%
Net Profit Margin: 12.33% 14.42% 15.35%
Return on Capital Employed: 53.31% 67.32% 72.28%

Efficiency Ratio


Year
Ratios 2011 2012 2013
Asset Turnover: 4.3224 times 4.6695 times 4.7085 times
Fixed Asset Turnover: 5.2835 times 4.8175 times 4.575 times
Inventory Turnover Days: 51.89 days 56.44 days 48.41 days

Liquidity Ratio


Year
Ratios 2011 2012 2013
Current Ratio: 1.11 : 1 0.90 : 1 0.87 : 1
Acid Test Ratio: 0.54 : 1 0.46 : 1 0.49 : 1
Trade Debtor Days: 15.93 days 13.18 days 13.52 days
Trade Creditor Days: 66.61 days 75.01 days 69.93 days

11

Investment Returns Ratio


Year
Ratios 2011 2012 2013
Dividend yield: 3.2% 3.3% 3.5%
Basic Earnings per share (EPS): RM 1.946 RM2.155 RM 2.395
Dividend cover:
Price / Earnings: 28.880 times 30.552 times 28.392 times

Gearing (Capital Structure) Ratio


Year
Ratios 2011 2012 2013
Debt ratio: 0.68 :1 0.61 : 1 0.61 : 1
Capital Gearing ratio: 0.37:1 0.10 : 1 0.09 : 1
Debt To Equity Ratio: 0.51 : 1 0.11 : 1 0.10 : 1
Interest cover: 27.09 times 32.63 times 33.51 times
3.2.2. Interpretation of Financial Performance
Return on Capital Employed
Bar chart of Figure 8 shows the profitability of Return on Capital Employed (ROCE) from year
2011 to 2013 of Nestl (M) Bhd. In year 2012, the ROCE of Nestl Company is at 67.32%
compared to the previous year which is 53.305%. ROCE has been increased by 14.015% within
one year period. This shows that Nestl is earning more profit than year 2011. It is due to the
sales volume of Nestl celebrated 100 domestic and export sales in year 2012. During 2012,
Nestl celebrated 100 years of being in Malaysia by organizing a lot of event that had a positive
impact on consumer confidence, which led to the strong performance in domestic sales. Besides,
Nestl was also introducing new products to boost their sales and reduce their total assets. These
reasons caused the strong growth in demand from the domestic as well as export markets
resulting in the sharply increase of ROCE during the year 2012.
Price/Earnings Ratio
The chart of Figure 9 shows the Price Earning (P/E) ratio from year 2011 to 2013 of Nestl
(Malaysia) Berhad. In year 2012, the P/E ratio of Nestl Company is at 30.522 compared to year
2011 and 2013 which is 28.880 and 28.392 respectively. The P/E ratio is the highest in 2011
compare to year 2011 and 2013. The P/E ratio of 2012 is viewed as more attractive than 2011
and 2013. In year 2012, Nestl Celebrated 100 years of being in Malaysia by Media launch. This
12

has increased the investors confidence. Therefore, the investors are willing to pay a premium
because of its optimistic future growth prospects.

Capital Gearing ratio
The bar chart (Figure 10) shows the capital gearing ratio from year 2011 to 2013 of Nestl
(Malaysia) Berhad. In year 2011, the capital gearing ratio of Nestl is 37% compared to 2012
and 2013 which is 10% and 9%. Therefore, the capital gearing ratio is highest in year 2011
compared to year 2012 and 2013. It is because in year 2011, Nestl launched new project which
required a long term borrowing loan. This showed that Nestl increased their capital by getting
debt funding from borrowers rather than getting equity funding from its shareholders. It may
have the risk that costs of business will be rapidly increased if the interest paid on debts increase.

Interest cover
The bar chart (Figure 11) shows the interest cover from year 2011 to 2013 of Nestl (Malaysia)
Berhad. In year 2011, the interest cover of Nestl is 27.09 compared to year 2012 and 2013
which is 32.63 and 33.51 which is higher than year 2011. This meant Nestls Ability to meet its
obligation was dropped too. It is because Nestl launched a new project which required a large
volume of capital. However, it is still under control of Nestl itself as at 27.09, its interest cover
ratio is more than satisfactory. It means that the necessary profit is 27.09 times larger than the
interest payments that the business had incurred.
















13

4.0 Performance Analysis
4.1 Comparison of Financial Ratios between F&N and Nestle for Year 2013

Profitability Ratio
F&N Nestle
Gross Profit Margin: 29.52% 35.38%
Net Profit Margin: 9.05% 15.35%
Return on Capital Employed: 17.04% 72.28%


Efficiency Ratio
F&N Nestle
Asset Turnover: 1.884 times 4.7085 times
Fixed Asset Turnover: 3.292 times 4.575 times
Inventory Turnover Days: 53.21 days 48.41 days

Liquidity Ratio
F&N Nestle
Current Ratio: 1.45 : 1 0.87 : 1
Acid Test Ratio: 1.06 : 1 0.49 : 1
Trade Debtor Ratio: 42.98 days 13.52 days
Trade Creditor Ratio: 53.21 days 69.93 days

Investment Returns Ratio
F&N Nestle
Dividend yield: 3.118% 3.5%
Basic Earnings per share (EPS): RM 0.717 RM 2.395
Dividend cover: 1.648 times
Price / Earnings: 25.94 times 28.392 times

Gearing (Capital Structure) Ratio
F&N Nestle
Debt ratio: 0.4 : 1 0.61 : 1
Capital Gearing ratio: 0.08 : 1 0.09 : 1
Debt To Equity Ratio: 0.09 : 1 0.10 : 1
Interest cover: 22.80 times 33.51 times




14

4.2 Performance Analysis of F&N and Nestle
This section provides a view on the performance and future prospects of both companies
throughout the years of 2011, 2012 and 2013. A few key factors have been identified in
determining the best company to takeover.

4.2.1. Comparison of financial performance of both F&N and Nestle
From the above table, Nestles profitability is looking more favourable than F&Ns. The
percentage of return on capital employed (ROCE) of Nestle is higher than F&N by almost 4
times. Looking closely at the trend of the profitability ratio over the past 3 years, Nestls gross
profit margin, net profit margin and ROCE notes a steady increase while the ratios of F&N
fluctuates uncertainly. This imposes that F&Ns profitability might not be stable and it might
subject to future uncertainties.
By looking at the asset turnover rate, Nestle is seen to have a higher rate than F&N. Looking
back at the trend of the previous three years for F&N, they recorded a decrease in the asset
turnover. However in the case of Nestle, they are actually increasing. This suggests that the
usage of assets in generating revenue is efficient in Nestle whereas in F&N the usage efficiency
is deteriorating.
Nestle also has higher investment return ratio as compared to F&N in the terms of the dividend
yields and dividend coverage in the previous 3 years. Investors will be getting more from their
investment in Nestle, rather than F&N. This is may attract more investors in the future.
However, looking at the overall gearing ratio of the two companies, F&N is doing better than
Nestle. Its capital gearing ratio and debt to equity ratio are both lower than Nestle. This means
Nestle is exposed to higher financial risk than F&N. Nevertheless, the interest coverage ratio of
Nestle during the previous 3 years shows an upward trend and this is definitely a positive sign of
the overall health of the company.
Through this analysis, it can be said that Nestls overall financial performance during the past 3
years is better than F&Ns. As an investor, this analysis is crucial in determining the future
survival of the company.
15

4.2.2. The strong Research & Development operations of Nestle
As it had been highlighted previous, one of Nestls competitive advantages is its strong R&D
operations. In Malaysia as well as around the world, people are shifting their diet towards a
healthier diet and Nestle realizes that. Hence with its investment of RM 6 billion annually on
R&D, they are able to be the food industry leader in nutrition, health and wellness.
By bringing together all of its global R&D resources, Nestl is able to provide high quality, safe
food solutions for consumers worldwide. Werner Bauer (Chief Technology Officer, Nestl
S.A)
One of the few projects undertaken by Nestle is Fortification of Micronutrient. According to the
2013 World Hunger and Poverty Facts and Statistics, 1 out of 3 people are affected by
micronutrients (vitamins and mineral) deficiency. Nestle is actually taking steps to address this
issue by fortifying its products with these vitamins and minerals. In 2012, Nestl sold over 150
billion servings of fortified products. The goal is to reach 200 billion fortified servings
worldwide by 2016 (Nestle, 2013).
Nestle believes that through these operations, it will allow Nestle to achieving its goals to help
address global and local issues in the areas of nutrition. This operation is also believed to have a
potential in increasing customer and shareholders value. As a prospective investor, this is
important as it maps the future of the company.

4.3.3. Property Development of F&N in Seksyen 13, Petaling Jaya

F&N is expecting to launch its first planned property project of its former factory land in Section
13, Petaling Jaya in the fourth quarter this year (The Edge Malaysia, January 2014). The
development on the 12.72 acre of land comprises of 900 units of serviced apartments, a hotel,
retail outlets and office lots. This project is a result from a partnership with FCL Centrepoinjt Pte
Ltd, one of Singapores top three residential property developers and retail mall owners and
operators (Star Property, May 2012).

This project is a good move by F&N to restore its profit margin when they recognized a decline
in profits during the year 2012 due to the cessation of Coca-Cola business, the 200-days flood in
Thailand that affected the Thai plant and the increasing raw material cost. Nevertheless, the
success of this project is subject many uncertainties.


16

For one, this development is still undergoing and no one could predict the future of this market,
depite F&Ns optimism. Secondly, as a bread manufacturer looking to expand its business
deeper into the food and beverage industry, this development might deviate the direction of our
expansion. No doubt this development project opens up new stream of revenue, however, skills
and knowledge in managing property may be lacked. It is not impossible to takeover this but
proper planning must be done in order to succeed.



http://www.j-
propves.com.my/?cur=news/view&id=980&title=News_:_F&N_to_Reap_Profit_from_PJ_Prope
rty_Development_in_3_Years

http://www.theedgemalaysia.com/business-news/272471-fan-to-launch-pj-development-in-
4q.html

http://www.thestar.com.my/Business/Business-News/2013/11/09/FN-sticks-to-property-plan-It-
will-launch-mixed-project-at-Section-13-next-year/

http://www.starproperty.my/index.php/articles/property-news/fn-sees-revenue-from-property-
development-in-fy16-2/