Nestle India net profit rises 36.9% in June qtr on higher sales and margins

Nestle India’s net profit rose 36.9 per cent year-on-year (YoY) to Rs. 698.3 crore in the June quarter on the back of higher sales and margins.

The KitKat maker reported net sales of Rs. 4,619.5 crore, up 15 per cent in the second quarter of the financial year (it follows a January-December financial year) over the same quarter last year.

On a sequential basis, its net profit was down 5.2 per cent and net sales were lower by 3.9 per cent.

The firm’s PBIDT (profit before interest, depreciation, and tax) was up 29.4 per cent in the quarter to Rs. 1,079.5 crore. However, compared to the January-March quarter, it was down 4.4 per cent.

“I am pleased to share that we have, yet again, delivered robust performance, with all product groups registering double-digit growth. This is the fifth quarter of double-digit growth in a row across all product groups,” Suresh Narayanan, chairman and managing director, Nestle India, said in the results release.

He added domestic sales were broad-based and grew 14.6 per cent on the back of prudent pricing and were held up by mix and volumes with targeted brand support. Its key brands, led by KITKAT, NESCAFÉ, and MAGGI, continued to perform well.

The company’s out-of-home business continued its strong growth through a pivot of dual strategies in terms of portfolio transformation and robust precise execution of differentiated channels and geography plans to harness big-growth opportunities.

Narayanan said in the release that its RURBAN (rural + urban) strategy was aided by its distribution footprint with relevant portfolios and hence it achieved higher penetration.

“We witnessed strong growth across mega cities and metros, robust performance in Tier 1 to 6 towns and continued strength in rural markets. E-commerce continued to perform strongly and now accounts for almost 6.5 per cent of sales,” he said.

In its commodity outlook, Nestle India said edible oils, wheat, and packaging material had been in the lower price range.

“A reversal of price trend is noted in fuels with prices softening in (the) second quarter after reaching (a) higher level towards the end of quarter one. In fresh milk, there has been price stability. Robusta prices are elevated and are expected to remain volatile,” it said.

During the quarter, the company launched three products -- Resource Fiber Choice, for gut health solution; Everyday Zero, the dairy whitener with no added sugar; and MUNCH breakfast cereals.

The board of Nestle India approved changing the financial year of the company from “January 1-December 31” to “April 1-March 31”, subject to approval. Accordingly, the current financial year of the company will be extended up to March 31, 2024, covering a period of 15 months, it said in a stock-exchange filing.

The company has announced it will open its 10th factory in Odisha.

“We have now received ‘in principle’ approval from Industrial Promotion & Investment Corporation of Odisha. Our dream and ambition is to make also the Odisha factory ‘State of art’ in line with our continuing commitment to gender diversity, sustainable manufacturing, paperless digitally managed facility with an abiding focus on the environment in terms of practices,” Narayanan said.