Nestlé to build world’s biggest Milo factory in Chembong

The RM100m investment will scale up capacity, making Chembong the biggest Milo manufacturing centre in the Nestlé world

By FARA AISYAH / Pic By MUHD AMIN NAHARUL

Nestlé (M) Bhd is expected to invest over RM100 million to expand its factory in Chembong, Negri Sembilan, and transform the facility into the world’s biggest Milo Manufacturing Centre of Excellence.

Nestlé Malaysia CEO Alois Hofbauer (picture) said the project is in line with the group’s strategy to drive strong, profitable and sustainable growth, while investing in Malaysia as a key manufacturing hub for the group.

He said in a statement yesterday that the expansion is also part of Nestlé’s continuous drive to improve efficiency and enhance competitiveness.

To facilitate the expansion, Nestlé Malaysia will be moving all existing Milo manufacturing operations from its Petaling Jaya (PJ) factory to consolidate and expand Milo production at the Chembong factory.

Hofbauer said the Milo plant in Chembong is an integral part of the company’s business, supplying Milo domestically and contributing exports to over 20 countries.

“Through the concentration of our Milo operations and our investment of over RM100 million into the Chembong factory, we will not only be able to further upgrade production facilities and improve operational efficiencies, but also scale up capacity and make Chembong the biggest Milo manufacturing centre in the Nestlé world. This will help us to better meet growing local and export demand,” he said.

Subsequently, Nestlé Malaysia is disposing of its chilled dairy and manufacturing businesses to French company, Groupe Lactalis for a cash consideration of RM155.3 million.

In an exchange filing yesterday, Nestlé Malaysia said its wholly owned subsidiaries, Nestlé Products Sdn Bhd (NPSB) and Nestlé Manufacturing (M) Sdn Bhd (NMSB) have entered into a business transfer agreement whereby the vendors have agreed to sell and transfer the chilled dairy business and its manufacturing business as a going concern to Lactalis Trading Malaysia Sdn Bhd and Lactalis Manufacturing Malaysia Sdn Bhd respectively.

The proposed disposal includes the selling by NPSB of its business of distribution, marketing, promotion and sale of chilled dairy products in Malaysia, Singapore and Brunei.

Meanwhile, the sale of NMSB will include the manufacturing of chilled dairy products and cold sauces, the packing of milk powder at the PJ factory; and the manufacturing fixed assets used in the manufacturing of chilled dairy products and cold sauces, as well as the packing of milk powder at the PJ factory.

Apart from the RM100 million proceeds from the disposal, which will be utilised to establish the Milo Manufacturing Centre of Excellence in the Chembong factory by end of 2019, the balance of the proceeds (net of disposal-related expenses) will be utilised to reduce bank borrowings and intercompany debts.

Trading in Nestlé Malaysia’s shares was suspended until 5pm yesterday in relation to the announcement.