Nestle India Q3 net profit up 30% to Rs 4.46 bn; sales rises to Rs 29.39 bn

Food and beverages major Nestle India’s net profit rose 30 per cent, beating the Street’s estimates, to Rs 4.46 billion in the July-September quarter. 

The company’s profit after tax (PAT) stood at Rs 3.43 billion during the corresponding quarter in the last financial year.

Net sales surged to Rs 29.39 billion from Rs 25.14 billion — a growth of 17 per cent — backed by strong broad-based volume growth, the company said in a statement.

Net sales and PAT remained four and eight percentage points higher, respectively, than estimated by market research firm Edelweiss Securities.

Earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 27 per cent year-on-year (YoY) to Rs 7.47 billion — six per cent ahead of estimates in spite of Nestle stepping up marketing activities to strengthen its brands.

Other expenses that include advertisement and promotional expenses, surged 23.5 per cent to Rs 7.18 billion.

Its performance during the quarter got a boost from successful new launches in recent quarters and regaining of market share by Maggi noodles. The company now holds over 60 per cent of the Rs 35 billion instant noodles market.

Maggi had over 78 per cent share of the market under its belt before it got banned in early 2015. “Our focus on innovation and renovation continued with the introduction of MAGGI Special Masala Noodles, MAGGI Dip and Spread, KITKAT Dessert Delight Brownie Kubes, NESCAFÉ É coffee machine, and NESPLUS Breakfast Cereals”, said Suresh Narayanan, Chairman and Managing Director of Nestlé India.

While the cost of goods went up by 9.2 per cent YoY to Rs 11.84 from Rs 10.85, surging commodity prices and logistics cost are cause of concern. Narayanan recently said the firm may have to relook at pricing of certain products in the near future, as the trade-off between managing costs and maintaining margins is becoming difficult with rising inflation.

“We are witnessing headwinds in commodity and crude oil prices, coupled with currency depreciation,” Narayanan said on Friday.