PETALING JAYA: Despite the Middle East conflict, Nestle (Malaysia) Bhd management is confident about its operations and has clarified that 80% of its raw material requirements remain unaffected by the conflict.<\/p>\n
CIMB Research, in a note, reiterated its positive view on Nestle following its first quarter ended March 31, 2026 (1Q26) briefing, underpinned by its defensive staples demand profile and still-supportive input cost backdrop.<\/p>\n
\u201cNestle clarified that 80% of its raw material requirements remain unaffected by the United States-Iran conflict.<\/p>\n
\u201cThe remaining 15% to 20% exposure has been effectively mitigated through the use of alternative suppliers and the re-routing of shipments via shipping routes that bypass the Strait of Hormuz,\u201d the research house said.<\/p>\n
Nestle noted some increase in packaging costs arising from supply disruptions, and highlighted ongoing efforts to identify alternative plastic packaging solutions, including greater use of recycled materials.<\/p>\n
\u201cOverall, we view these clarifications positively, as they point to minimal risk of supply disruption to operations, with a manageable impact on margins,\u201d the research house added.<\/p>\n
An analyst told StarBiz that Nestle is proving its resilience amid the current uncertainties, and said the group was not new to challenges, citing the past boycott on its products.<\/p>\n
In a note to clients, Hong Leong Investment Bank (HLIB) Research remained constructive on Nestle\u2019s outlook, supported by resilient consumer demand and a strong innovation pipeline across its growth platforms, including KitKat beverages, Nescafe coffee concentrate and Maggi air fryer solutions.<\/p>\n
Citing the group\u2019s management, HLIB Research said the company expressed confidence in its operations despite the Middle East conflict disruptions, with alternative supply routes secured, limited exposure to affected transit lanes and no price hikes on the card for quarter two and three.<\/p>\n
Inventory levels have been deliberately raised for financial year ending Dec 31, 2026 as a risk management measure, which may temporarily weigh on working capital requirements, but demand remains healthy and trade stocks are at comfortable levels, it added.<\/p>\n
Nestle also continues to strengthen its environmental, social, and governance and local sourcing footprint through recycled packaging, local supplier development and community engagement initiatives, reinforcing its sustainability stance.<\/p>\n
HLIB Research said Nestle\u2019s inventory levels were strategically increased to last the next two quarters to mitigate supply risks, and the group remains confident in its ability to maintain product output, supported by ongoing initiatives to localise its supply chain.<\/p>\n
Notably, Nestle maintains its \u201cno price hike\u201d stance for 2Q26 to 3Q26, leveraging on operational efficiencies to manage incremental costs, it said, adding that higher costs across certain segments of the raw material chain are being neutralised by softening cocoa and coffee prices, effectively preserving gross margins.<\/p>\n","protected":false},"excerpt":{"rendered":"PETALING JAYA: Despite the Middle East conflict, Nestle (Malaysia) Bhd management is confident about its operations and has…\n","protected":false},"author":2,"featured_media":58494,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[126],"tags":[32541,29412,61,32543,199,32540,32544,32542,2849],"class_list":["post-58493","post","type-post","status-publish","format-standard","has-post-thumbnail","category-nestle","tag-consumerstaples","tag-corporate-news","tag-esg","tag-inputcosts","tag-nestle","tag-nestlemalaysia","tag-nopricehike","tag-operationalresilience","tag-supplychain"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116496417620185263","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/58493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=58493"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/58493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/58494"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=58493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=58493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=58493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}