Nestle Q1 Profit Slips 1.25% To Rs 594.71 Crore; Net Sales Up 9.7%

The company, which follows January-December financial year, had posted a profit of Rs 602.25 crore in the same period a year ago, Nestle said in a BSE filing.

FMCG major Nestle India Ltd on Thursday reported a 1.25 per cent decline in its net profit to Rs 594.71 crore for the first quarter ended March 2022, mainly due to rising input costs.

The company, which follows January-December financial year, had posted a profit of Rs 602.25 crore in the same period a year ago, Nestle said in a BSE filing.

However, Nestle India''s net sales increased 9.74 per cent to Rs 3,950.90 crore during the quarter against Rs 3,600.20 crore in the corresponding period last fiscal, the company added.

"As highlighted in previous quarters, cost of key raw and packaging materials are witnessing 10-year highs, and costs continued to surge this quarter, which has impacted profit from operations. Continued inflation is likely to be a key factor in the short to medium term," Nestle India earning statement quoted its Chairman and Managing Director Suresh Narayanan as saying. 

However, "we are confident of facing this turbulence with strategies of scale, efficiencies, mix and pricing all of which we will deploy judiciously," he added.

Its total expenses in the January-March quarter rose 12.98 per cent to Rs 3,195.90 crore compared to Rs 2,828.61 crore a year ago.

Nestle India's domestic sales surged 10.23 per cent to Rs 3,794.26 crore from Rs 3,442.03 crore in the January-March quarter of 2021.

Its exports were marginally down by 0.96 per cent at Rs 156.64 crore against Rs 158.17 crore in the year-ago quarter.

"Domestic sales growth is broad-based and largely driven by volume & mix. Export sales were lower by one per cent largely due to change in product mix," it said.

Narayanan said, "This quarter, we have delivered double-digit domestic sales, driven by volume and mix, which once again demonstrates the strength of our brands, consumer resonance and the resilience of the Nestle India team and our partners".

Nestle key brands continue to perform well, with Maggi Noodles, KitKat, Nestle Munch, Nescafe Classic, and Sunrise posting creditable double-digit growth in this quarter, he said 

"This growth across a range of categories was enabled by a mix of innovative campaigns, attractive consumer promotions, analytics-based consumer insights, geo-targeted distribution drives and leveraging the opportunity of festive seasons," Narayanan said.

During the quarter, Nestle India, as per its strategy, continued to progress well on its journey to small towns and villages and this has borne fruit with "strong sustained rural growth performance".

It has been complemented by strong growth in smaller town classes and urban agglomerates, Narayanan added.

"Our robust performance in e-commerce continued as the channel grew by 71 per cent and now contributes 6.3 per cent of domestic sales. We will continue to leverage e-commerce further through meaningful shopper insights, data analytics, speed, sharp communication, and customization," he said.

Meanwhile, in a separate filing, Nestle India said its board in a meeting held on Thursday has declared an interim dividend of Rs 25 per equity share having a face value of Rs 10 for 2022.

Discussing on short to medium term commodity outlook, Nestle said key commodities like edible oils, coffee, wheat, and fuel remain firm to bullish while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs.

"Input costs are expected to be on bullish trend both globally and locally. Fresh milk costs are expected to remain firm with the continued increase in demand and rise in feed costs to farmers," said Nestle India.

Share of Nestle India Ltd was trading at Rs 18,368.85 on BSE in the afternoon trade, up 0.30 per cent from its previous close. 

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