KUALA LUMPUR (Aug 27): Nestlé (Malaysia) Bhd’s (KL:NESTLE) share price has fallen below the RM100-mark after 10 consecutive days of decline, wiping out RM2.36 billion of the company’s market capitalisation.

Since August 12, shares in the thinly-traded counter have fallen 9.2% or RM10.08 to close at RM99.92 on Tuesday, giving the company a market capitalisation of RM23.43 billion.

The last time Nestlé shares fell below RM100 was on Jan 30, 2018.

One market watcher attributed the fall in share price to the recent unexpected shake-up in the top management of the company’s major shareholder Switzerland-based Nestlé SA, which saw CEO Mark Schneider being ousted.

According to a Reuters report, the decision was reached after Nestlé’s board became increasingly concerned about weak sales growth and cited worries about slowing product development, with new and revamped products taking longer to be devised and rolled out.

Due to this unexpected change, most analysts think Schneider’s successor Laurent Freixe, a long-time Nestlé executive, will pursue a strategic reset.

Most analysts have called for a conservative approach to the consumer goods giant’s prospects in view of near-term volatility and strategic uncertainty. 

Back home, Nestlé Malaysia reported dismal financial result for its second quarter ended June 2024 (2QFY2024), which saw net profit falling to RM93.60 million from RM180.92 million a year earlier, while revenue fell 13% to RM1.52 billion from RM1.75 billion.

For the cumulative six months ended June 30, 2024 (1HFY2024), revenue fell 8% while net profit was down 23.5%.

In its review of the 1HFY2024 period, Nestlé Malaysia attributed the drop in revenue to “subdued consumer sentiment and cautious spending observed during the Chinese New Year and Hari Raya festive seasons”. Profitability was also affected by high input costs and a weak ringgit.

In a report by a research house, it was noted that Nestlé Malaysia’s results were also affected by consumers switching to local brands, alluding to the ongoing campaign to boycott certain Western brands, following Israel’s attack on Gaza.