Nestle net profit declines 1.3% YoY to Rs 594.7 crore; revenue up 10.2%
Continued inflation could be a key factor in the short- to medium-term, Suresh Narayanan, chairman and managing director of Nestlé India, said, adding that cost of key raw and packaging materials are at 10-year highs, which has impacted profit from operations.
Nestlé India, which follows the January-December accounting year, saw its net profit decline 1.3 per cent year-on-year at Rs 594.7 crore. Its revenue from operations increased 10.2 per cent to Rs 3,980.7 crore in Q1.
“We have delivered double-digit domestic sales, driven by volume and mix,” Naryanan said in its earnings release.
“Our key brands continue to perform well with Maggi Noodles, KitKat, Nestlé Munch, Nescafé Classic, and Sunrise posting creditable double-digit growth in this quarter.” Its domestic sales increased to Rs 3,794.3 crore against Rs 3,442.0 crore in the year-ago period, an increase of 10.2 per cent, while its export sales declined 1 per cent to Rs 156.6 crore in the quarter-ended March.
During the January-March quarter, Nestlé India’s PBIDT (profit before interest, depreciation, and tax) was down 1.4 per cent at Rs 945.9 crore.
In its outlook, Narayanan said input costs were expected to be elevated globally as well as locally. He was confident about facing this with strategies of scale, efficiencies, mix, and pricing.
On its commodity outlook for the short to medium term, the company said the cost outlook for key commodities like edible oils, coffee, wheat, and fuel remained firm to bullish while the costs of packaging material continued to increase amid supply constraints, rising fuel, and transportation costs.
Fresh milk costs are expected to remain firm with a continued increase in demand and rise in feed costs to farmers. The company will continue on the path of penetration-led volume growth.
“We have continued to progress well on our RURBAN (rural + urban) journey and this has borne fruit with strong sustained rural growth performance, complemented by strong growth in smaller town classes and urban agglomerates,” Narayanan said in the release.
The firm’s e-commerce channel expanded 71 per cent and its contribution stands at 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 customisation,” Narayanan said in the release. Growth was largely from new formats like quick commerce and click & mortar. In organised trade, Nestle India witnessed strong broad-based revenue growth as footfalls normalised. The out-of-home channel posted better than expected Q1 results despite the third pandemic wave impacting January sales due to faster channel opening and due to revenue acceleration measure as per the agreed strategy (channel & geographical initiatives, portfolio transformation etc.)The company’s export focus remains broadening the product portfolio in new markets; expanding new categories like confectionery and its offers with the Maggi range, fuelled with channel expansion in mainstream in the United Kingdom and Australia., the company said.
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