NESTLE TO INVEST MORE THAN RM100M ON FACTORY EXPANSION KUALA LUMPUR: Nestle (Malaysia) Bhd plans to invest more

than RM100 million on factory expansion next to its existing Shah Alam beverage production lines. In October 2010, it bought a piece of land adjacent to the companys plant in Shah Alam from British American Tobacco (M) Bhd for RM36 million. Nestle's Shah Alam factory mainly makes beverages. "We're looking at expanding into the land next to our existing Shah Alam facilities. We've not finalised what kind of lines to put in," said managing director Peter Vogt. Nestle Malaysia may boost its output of a variety of products here if the company's plants in Thailand are forced to scale back production due to the flooding there. "We are still in discussion but we, along with other Nestle operations in the region, will support Thailand as much as we can and when necessary, to ramp up capacity (to meet Thailand's demand)," he said. In the past year, a weak US dollar had buoyed price rises in all commodities. Vogt acknowledged that prices of coffee, cocoa, milk, sugar and edible oils are high but the company does not have any plans to raise prices of its consumer products. "Lately, the commodity prices have started to settle. We're keeping a close watch month-bymonth. In fact, we foresee them softening in the months to come." Nestle, a food and beverage heavyweight, has long been seen as a reference body for other food manufacturers. Any price adjustments would have a cascading effect on restaurateurs and food catering businesses at large. Next year, Nestle will celebrate its 100th anniversary in Malaysia. It plans to do it with a yearlong celebration of "good food and good life". Among celebration activities slated are healthy lifestyle campaign, exhibition and the charity distribution of 100,000 packets of Nestle food products.

NESTLE WARNS ON MARGINS, LIFTS SALES GOAL PARIS: Nestle, the world's biggest food group, said weakening consumer sentiment in developed markets would make it harder to improve margins, when raising its 2011 sales growth outlook after beating forecasts for the first nine months. The Vevey, Switzerland-based company said yesterday it had sales of Sfr60.9 billion (RM211 billion) through September, down from Sfr70.4 billion (RM244 billion) during the same period in 2010. Prices for key commodities such as coffee, grains, milk and sugar should remain high despite small recent falls, which will keep pressure on profit margins, the company said yesterday. The maker of KitKat chocolate bars and Nespresso coffee capsules softened its optimism about margins, saying it was now looking for an increase this year, having used a more confident tone at its half-year results back in August. "For the year as a whole, in spite of input cost pressures, we expect to slightly over perform against our long-term organic growth range of 5-6 per cent and continue to strive for a margin improvement in constant currencies," said chief executive Paul Bulcke. Underlying nine-month sales at the owner of brands such as Carnation, Maggi, Nescafe and Perrier, rose 7.3 per cent, compared with a forecast for 7.1 per cent in a poll and down from 7.5 per cent in the first half. Analysts said price hikes and strong demand in emerging markets allowed Nestle, like other big European food groups, to make up for weakening consumer sentiment in mature markets in western Europe and the US. Chief financial officer Jim Singh conceded that the strength of the Swiss franc was weighing on earnings but he insisted that Nestle "maintained a solid growth momentum" with more than 60 per cent of Nestle's brands gaining market share around the world. A more detailed look at the nine-month figures show that Nestle saw sales fall across all areas and product groups compared with a year ago. Agencies

NESTLE TO RAISE PRICES OF SELECTED DAIRY PRODUCTS KUALA LUMPUR: Nestle (M) Bhd, a unit of the world's biggest food company, plans to increase prices of some of its dairy products by as early as next month, people familiar with the matter said yesterday. Business Times understands that the price increase could be between 10 per cent and 30 per cent. An official familiar with Nestle's operations here, speaking on condition of anonymity, confirmed that the company is studying options of a price increase, but was unaware of the quantum involved. Nestle's corporate affairs manager Zamira Yasmin said Nestle will always avoid passing cost increases to consumers unless absolutely necessary. "Nestle evaluates closely the development of the global milk pricing and evaluate our pricing accordingly," she said in an email reply. It is learnt that the rationale for the increase in cost is because of the floods in Thailand, which have drastically increased the cost of raw materials, production and transport. Nestle (Thai) Ltd has vast production capacity for milk and coffee products as well as the processing of the Purina pet food. Industry players say a price increase by Nestle will surely be followed by rivals such as Fraser & Neave Holdings Bhd, which has shut down its factory operations in Thailand for the time being due to the severity of the floods. F&N is the largest canned milk producer in Southeast Asia. Nestle is 72.61 per cent owned by Switzerland's Nestle S.A. The other major stakeholders in the Malaysian unit are the Employees Provident Fund with a 7.65 per cent stake and Great Eastern Life Assurance (M) Bhd with a 2.21 per cent stake. The company posted sales of RM4.02 billion in the financial year ended December 31 2010, alongside a net profit of RM391.40 million.