Nestle India Q3 net down 60% at Rs 124 cr

Total income decreased 31% to Rs 1,769 cr; company says Q3 results impacted by Maggi noodles issue

Hit by the ban on Maggi instant noodles, Nestlé India’s net profit plunged 60 per cent to Rs 124 crore in the September quarter from Rs 311 crore on a year-on-year basis. Underperforming the market estimates, the food major’s net sales declined by 32 per cent during the quarter to Rs 1,736 crore, compared to Rs 2,558 crore in the year ago period.

While Nestlé has managed to turn around its bottomline and became profitable during the quarter after a Rs 64-crore net loss. Its financial performance has remained below the market estimates. According to Bloomberg Consensus estimates, Nestlé’s net sales underperformed the street estimates by 14.4 percentage points or Rs 292 crore.

“The net profit is 42 per cent below our estimated Rs 215 crore,” said Abneesh Roy from Edelweiss Securities. The recent fiasco related to alleged presence of toxic metal in its instant noodles has also impacted sales of Nestlé’s other products to some extent, sector analysts pointed out.

Nestlé’s managing director Suresh Narayanan said, “Quality and safety of our products are priorities, which are non-negotiable. We take pride that our consumers, partners and stakeholders have stood by us during the current situation and we are humbled and overwhelmed by the messages of love and support we receive each day. We have commenced manufacturing and after clearance of the samples to be tested by the three accredited laboratories, are keen to reintroduce your Maggi noodles at the earliest.”

Absence of Maggi noodles in Nestlé’s product portfolio during the entire quarter and civil unrest in Nepal has brought down Nestlé’s earnings in the quarter.

During the quarter, Nestlé collected stocks worth Rs 15.3 crore from the market - bringing the cumulative loss of Maggi noodle stocks to Rs 303.7 crore.

The company has already started manufacturing of the instant noodles in three of its manufacturing units at Punjab, Karnataka and Goa.

It is in talks with authorities “to commence manufacture in the remaining factories in Himachal Pradesh and Uttarakhand”, Narayanan told Nestlé’s shareholders.

Maggi noodles contributes some Rs 2,500 crore or 26 per cent of Nestlé India’s Rs 9,800 crore yearly revenue.