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Informist, Thursday, Oct. 17, 2024

 

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--Jul-Sept net profit INR 9.86 bln
--Analysts saw Nestle Jul-Sept net profit INR 8.75 bln
--Jul-Sept revenue INR 51.04 bln
--Jul-Sept net profit INR 9.86 bln vs INR 9.08 bln
--Jul-Sept revenue INR 51.04 bln vs INR 50.37 bln
--Apr-Sept net profit INR 17.33 bln vs INR 16.06 bln year ago
--Apr-Sept revenue INR 99.18 bln vs INR 96.95 bln year ago
--Jul-Sept e-commerce sales grew 38%, driven by quick commerce
--Prices for coffee, cocoa remain elevated
--Jul-Sept domestic sales INR 48.83 bln vs INR 48.24 bln year ago
--See prices for cereals, edible oils accentuated
--Relative stability in prices of milk, packaging
--Jul-Sept exports INR 1.92 bln vs INR 1.86 bln year ago
--Nestle India board approves Manish Tiwary as MD effective Aug 1
--Profit from operations at 21% of sales in Jul-Sept

 

By Narayana Krishna

 

HYDERABAD - Nestle India Ltd today reported a net profit of INR 9.86 billion for the September quarter, up 9% on year, on revenue of INR 51.04 billion, up 1.3% on year, despite a spike in raw material costs.

 

The company's net profit for the quarter was better than analysts' expectations, but revenue was below estimates. Analysts had expected Nestle India's net profit for Jul-Sep at INR 8.8 billion and revenue at INR 53.2 billion. Sequentially, the company's net profit was up 32%, while revenue rose 6%.

 

Nestle India reported a one-time income of INR 2.91 billion for the quarter. The exceptional gain is related to slump sale of its nutraceutical business to Dr Reddy's Laboratories and Nestle Health Sciences Ltd. The gains also include sale of one business division to a subsidiary company, Nestle India said.

 

Shares of the company fell slightly after the earnings were announced and, at 1231 IST, were at INR 2,391.25, down 2.9%.

 

Nestle India's year-on-year revenue growth in Jul-Sept is the lowest in at least 17 quarters. The company's profit from operations for the quarter is at 21% of sales.

 

"Despite a challenging external environment with muted consumer demand and high commodity prices especially for coffee and cocoa, we remained resilient in our pursuit to deliver growth. This quarter, five of our top 12 brands grew at double digit," a press release by the company quoted Chairman and Managing Director Suresh Narayanan as saying.

 

While some key brands witnessed pressure due to softer consumer demand, the company said it has plans in place to address this.

 

"It is heartening to note that in the last nine months, 65% of our top 12 brands, including Maggi noodles, showed positive volume growth," Nestle India said. Its beverages business continued to do well and posted high double-digit growth, backed by strong performance across its core brand Nescafe and its variants.

 

The company's domestic sales for the quarter were up 1.2% on year at INR 48.83 billion, against INR 48.24 billion a year ago. The company's exports in Jul-Sept stood at INR 1.92 billion, compared with INR 1.86 billion a year ago. The company said it was targeting to expand its footprint to Canada, West Asia, Maldives and Papua New Guinea.

 

Sales in the e-commerce segment during the quarter were up 38% on year, mainly led by quick commerce and fuelled by brands such as Kitkat, Nescafe, Maggi, and Milkmaid, the company said in a press release. Growth in this segment was supported by premiumisation, new user acquisition, festive participation, and targeted digital communications, it said.

 

Raw material costs, the key component tracked by most market participants for Nestle India, rose 6% on year and 4% on quarter to INR 20.25 billion. Raw material prices are up after four quarters of a year-on-year decline. While pressure from raw material costs hit Nestle India's performance during the quarter, this was relatively stable for some product segments, the company said.

 

The company said prices of milk and packaging were relatively stable, while coffee and cocoa prices remain elevated. 

 

For Jul-Sept, the company's total expenditure was up 3.4% on year at INR 40.90 billion. While other expenses were up 11% on year at nearly INR 12 billion, the tax outgo for the quarter was 3.6% higher on year at INR 3.25 billion.

 

For Apr-Sept, Nestle India's net profit was up 8% on year at INR 17.32 billion on revenue of INR 99.18 billion, which was up 2.3% on year.

 

NEW PROJECTS

Nestle India said it has recalibrated and revived its product portfolio by launching over 145 new products, contributing 7% to sales. The company said there were eight new projects in the pipeline now.

 

This year, Nestle India launched a variant of its popular brand Cerelac, with no refined sugar, part of the company's product revival programme. The company sells 21 variants of the Cerelac cereal.  

 

The company is also setting up three biomass plants at its factory locations in Nanjangud, Moga, and Sanand.

 

The company's board today approved the appointment of Manish Tiwary as managing director for five years effective Aug 1 next year, as incumbent Suresh Narayanan is set to retire on Jul. 31.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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