Nestle India March qtr profit up 14.6% on double-digit sales growth

Key products like Maggi Noodles, Kitkat, Nescafe Classic, Maggi Sauces, Milkmaid and Maggi Masala-Ae-Magic delivered robust performance as in-home consumption surged

Packaged food major Nestle India reported a 14.6 per cent jump in its net profit for the January-March quarter, backed by double-digit growth in domestic sales and muted rise in raw material costs compared to the corresponding quarter last year. The firm’s net profit for the quarter stood at Rs 602 crore, up from Rs 525 crore in 2020.

Its net sales surged 8.9 per cent year-on-year to Rs 3,600 crore from Rs 3,306 crore. Domestic sales that contribute to over 94 per cent towards its revenue, grew 10.2 per cent to Rs 3,442 crore but exports declined 13 per cent, dragging its top-line growth to single digit.

The company said it registered a broad-based growth during the quarter, largely driven by volume and mix. Key products like Maggi Noodles, Kitkat, Nescafé Classic, Maggi Sauces, Milkmaid, Maggi Masala-Ae-Magic, among others, delivered robust performance and achieved double-digit growth as in-home consumption surged, said Suresh Narayanan, chairman and managing director at Nestle India. While demand from out-of-home channels improved further, it continues to be impacted by the Covid-19 pandemic.

Further, the ongoing pandemic continued to boost its online sales. In the quarter, sales from e-commerce channels grew by 66 percent year-on-year and contributed an unprecedented 3.8 per cent towards its domestic sales.

Growing cost of key materials, however, is emerging as a potential challenge, said Narayanan. “While the Nestlé India family has learnt to cope with the operating volatility in the pandemic, recent sharp escalations in key raw material prices poses challenges that we will resolutely respond to, while maintaining the integrity of our business model”.

While the share of raw material costs in its total sales fell during January-March, over the same quarter previous year, during the latter parts of the quarter, Nestle witnessed headwinds in terms of rising cost of packaging materials and commodities. Since a part of its raw materials are booked or purchased in advance, the benefits of the lower cost of raw materials in the quarter may not reflect the situation on-ground and may have a larger impact on its margins in coming quarters, said analysts.