Nestle India's Q1 profit falls 1% to Rs 595 crore; revenue rises 10%

Nestle Q1 result: The management remains cautious of continued inflation as it shadows short-to-medium term growth outlook.

Shares of Nestle India slipped 1.12 per cent, in an otherwise upbeat market, after the company's net profit declined by 1.2 per cent year-on-year (YoY) to Rs 594.7 crore in March quarter (Q1CY21). The company had posted net profit of Rs Rs 602.25 crore in the year-ago quarter.

The FMCG major, however, registered a near 10 per cent growth YoY in total income to Rs 4,002.14 crore from Rs 3,640.47 crore. While the domestic sales were largely driven by volume growth and sales mix, exports took a hit as it declined by 1 per cent YoY due to change in product mix. The total sales (Rs 3,950.9 crore) and domestic sales (Rs 3,794.2 crore) increased by 9.7 per cent and 10.2 per cent respectively in a year. 

Cost of input cost materials dampened the profit from operations, which declined by 0.9 per cent YoY to Rs 832.45 crore. Operating margin lowering by 200bps for 1QCY22 as compared to the same quarter last year due to higher commodity prices, particularly edible oil and packaging materials, partly offset by better realisations. 

The management remains cautious of continued inflation as it shadows short-to-medium term growth outlook. "As costs of key raw and packaging materials are witnessing 10-year highs, it has impacted profit from operations. Continued inflation is likely to be a key factor in the short to medium term. We are confident of facing this turbulence with strategies of scale, efficiencies, mix and pricing all of which we will deploy judiciously," said Suresh Narayanan, Chairman and Managing Director at Nestlé India.

Category wise, the management said that the out-of-home business posted better-than-expected Q1 results. "KitKat and Nestlé Munch, both registered double-digit growth. Nescafé Classic and Sunrise delivered double-digit growth, supported by generating demand inputs to leverage the consumption season," the management added.

On 11 April 2022, the Board of Directors had declared an interim dividend for 2022 of Rs 25 per equity share, which will be paid on and from 6 May 2022 along with the final dividend for 2021 of Rs 65 per equity share.