Nestle (Proejct)

Production

Marketing

Exports Ø    OPERATING RESULTS The year 2000 offered no relief from the difficult    economic environment that had badly impacted the country in 1999. To make matters worse, some major disruptions in the trade affected our retailing activities over several months in the form of strikes against the taxation policies of the government. However, despite this difficult business climate, we can reasonably consider the    year 2000 as another successful year for Nestle Milkpak Ltd. The company achieved a double-digit (15.5%) real internal growth for the third consecutive year, driven by a strong performance on our milks category and by the successful development of some more recently launched products: soluble coffees and water  Total sales for the year reached Rs.6.57 bio. Showing a growth of 14% over the previous year. After tax profit for the year was stable in absolute terms at Rs.272.4 mio, owing to the difficulties faced in increasing our consumer selling prices and to a higher effective tax rate Ø    MARKETING UHT milk grew at a faster pace than the industry, mainly due to price stability and aggressive media and non-media activities. NESTLE Plain Yogurt was launched on November 1, 2000 in the biggest branded yogurt market - Lahore, supported by a fully integrated marketing campaign. The product was very well received by the consumers. We continued to expand our water business. While NESTLE PURE LIFE retained its significant market share in the retail sector, we launched the Jumbo Service (5-gallon bottles for home and office consumption) in July 2000 in Lahore, thereby entering a very promising market segment. The results are very positive and the market developing fast In addition, significant progress was achieved across the broad range of our business activities such as Information systems, logistics, sales and distribution structure where strong distribution and effective merchandising made a major contribution in achieving The high rate of growth as mentioned above. Ø    MILK COLLECTION As regards fresh milk, the year under review saw excellent progression. The quantity of milk collected increased by over 12%, while the quality improved considerably, thanks to the substantial investments made in chilling lines over the last years. Ø    PERSONNEL Relationship with the staff (total staff as at 31.12.2000: 1.149 as against 1.097 at the end of 1999) especially the workers, remained cordial. All achievements made during the period under report were only possible due to a great deal of dedicated efforts and team work by the company's staff. The directors take this opportunity to thank all of them for their hard work and commitment. Ø    FUTURE OUTLOOK We feel that economic difficulties currently faced by the country are likely to continue in the year 2001 and that much of the un-certainty will remain. In-spite of this difficult business environment, we are confident to maintain our growth momentum and perform satisfactorily in the coming year. We shall continue to focus on a long-term view of the business, quality consciousness and operational efficiency through innovation and renovation. Ø    FOR AND BOARD OF BOARD OF Chief Executive Lahore: March 15, 2001 Ø    Management Board of Directors                               Syed Yawar Ali               Chairman Friedrich G. Mahler         Managing director Syed Babar Ali                        Member Garrett M.W.O.                       Member                Marcel Fischli                          Member D. Dupont                               Member Syed Hyder Ali                        Member Ø    Company Secretary Philippe Blondiaux Ø    The Management Team Friedrich G. Mahler                 Managing Director Philippe Blondiaux                 Finance & Control Manager Olivier Desponds           Marketing Manager       Nyman Koswanage                 Factory Manager Ø    Organization Ø     Head Office Ø     Factories Ø     Regional Sales Offices Ø    Milk Collection Centers