Nestle India Q1 profit rises 11% to Rs 486.60 cr; net sales up 1.96%

FMCG major Nestle India Ltd on Tuesday reported a 11.14 per cent increase in net profit at Rs 486.60 crore for the quarter ended June 2020, helped by increase in sales.

The company, which follows January-December financial year, had posted a profit of Rs 437.79 crore in the same quarter a year ago, Nestle India said in a BSE filing.

Its net sales rose 1.96 per cent to Rs 3,041.45 crore during the quarter under review from Rs 2,982.83 crore in the corresponding period of last fiscal.

Commenting on the results, Nestle India Chairman and Managing Director Suresh Narayanan said, "The past three months have witnessed volatility, uncertainty and stresses that we had never imagined before nor experienced.

"This led to disruptions across the value chain of the company that has impacted our results, though we have built back momentum strongly as we ended the quarter."

Nestle India's domestic sales rose 2.55 per cent to Rs 2,907.74 crore in April-June quarter as against Rs 2,835.37 crore a year ago.

Exports declined 9.32 per cent to Rs 133.71 crore as against Rs 147.46 crore in the corresponding quarter last year.

Total expenses rose marginally to Rs 2,436.14 crore from Rs 2,414.35 crore.

During April-June, Nestle India witnessed over two-fold jump in sales from e-commerce, while 'out of home' sector performance was subdued.

"We delivered strong performance in the 'e-commerce' channel which grew by 122 per cent this quarter and now contributes 3.6 per cent to domestic sales," Narayanan said.

"Demand in all 'Out of Home' consumption channels experienced a sharp decline due to the lockdown," he added.

However, in the 'in home consumption' segment, Nestle's brands such as EVERYDAY Dairy Whitener, Nestle a+ Milk and other milk based portfolio, NESCAFE Classic and NESCAFE Sunrise performed well this quarter, he said.

"MAGGI also witnessed solid growth towards the end of the quarter after initial supply constraints," he said.

The company has accelerated its "digital engagements across key parts of our portfolio, put out innovative campaigns to engage the consumers...while ensuring judicious application of marketing spends in line with the current business scenario," Narayanan said.

Besides, the company was also helped by lower tax rates during the quarter.

"Tax expense for both the quarter ended 30 June 2020 has been computed at the rates introduced by the Taxation Laws (Amendment) Ordinance 2019, dated 20 September 2019.Net profit after tax and earnings per share have been positively impacted by the lower tax rates," the company said.

During the first half (H1) of 2020, Nestle India's net profit rose 12.38 per cent to Rs 1,012.03 crore as against Rs 900.53 crore in January-June period of previous year.

Sales in H1 of 2020 rose 4.72 per cent to Rs 6,247.23 crore as compared with Rs 5,965.22 crore in 2019.

Shares of Nestle India Ltd on Tuesday settled 1.41 per cent lower at Rs 17,098.95 on the BSE.