The FMCG major reported a 4.32% decline in net profit to Rs 515.34 crore on 16.1% rise in revenue from operations to Rs 4,036.57 crore in Q2 CY22 over Q2 CY21.
Total sales jumped 15.7% year on year to Rs 4,007 crore in Q2 CY22 against Q2 CY21. Domestic sales and export sales for the quarter ended June 2022 increased by 16.4% and 0.66% respectively. Domestic sales growth is broad based with a healthy balance of pricing and volume & mix.
The company's profit before tax (PBT) fell 4.13% to Rs 700.35 crore in Q2 CY22 from Rs 730.49 crore recorded in the same period a year ago.
Total expenses jumped 20.89% year on year to Rs 3,355.59 crore in Q2 CY22 over Q2 CY21. Cost of raw material consumed surged 24.96% to Rs 1847.41 crore in the first quarter as against Rs 1,478.46 crore posted in corresponding quarter previous year.
Commenting on the results, Suresh Narayanan, chairman and managing director, NestlIndia said, I am pleased to share that we have continued to deliver robust sales growth this quarter and breached the Rs 40 billion (4,000 crore) mark. This is attributable to the resilience of my team and the tenacity of our partners. Our endeavour this quarter was to secure our 'engines of growth' in this inflationary context and to enable sharp overall business recovery when the pressures abate. The growth is broad based and while being primarily driven by pricing, has a healthy underlying volume and mix evolution. I am also happy to share that the 'out of home' space got back to accelerated growth in channels like hotels, education centres and workplaces. As far as channels are concerned, 'organized trade' saw broad based growth across consumers and categories.
The Milk Products and Nutrition category witnessed a double-digit growth across brands with MILKMAID leading the way. The Confectionery category led by KITKAT and NestlMUNCH performed with strong double-digit growth aided by media campaigns, attractive consumer promotions, trade inputs and focused distribution drives. The Beverages category turned in another double-digit growth across channels based on the pivotal equity of NESCAFand a consistent strategy of customized communication in the summer, as well as driving penetration and distribution. The Foods category continued its strong double-digit streak of growth, with improved market share in MAGGI Noodles.
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We continued to see strong momentum in mega cities and metros, as well as strong acceleration across smaller town classes which reinforces the execution of our RURBAN strategy.
Towards moving firmly in this direction, I welcome the Pet Food Business of PURINA Petcare India into our NestlIndia family and larger ecosystem. The Pet Food Business of PURINA Petcare India has gained traction amongst Indian pet owners and established the Pet Food brands across key segments, while building a robust pet specialty distribution network. Going forward, leveraging NestlIndia's network would further accelerate the growth of Pet Food Business in India and for NestlIndia a promising business would be a part of its portfolio from the last quarter ending 31 December 2022."
In its commodity outlook, the company said that it is witnessing early signs of softening in few of the commodities like edible oils and packaging materials. Fresh milk, fuels, grains and green coffee costs are expected to remain firm with continued increase in demand and volatility.
Meanwhile, the board has approved the acquisition of the Pet Food Business (PFB) from PURINA Petcare India. The integration of Pet Food Business with NestlIndia is proposed with effect from 1 October 2022. The cost of this transaction is Rs 123.5 crore subject to change in net asset position between 31 March 2022 and 30 September 2022 along with net cash/debt as on 30 September 2022. The transfer of PFB to Nestle India is proposed from 1 October 2022.
The object of the acquisition is that the company will get access to the Pet Foods Business which has been growing in India at a Compounded Annual Growth Rate (CAGR) during 2018-21 of 39.4% and is estimated to grow ' at a CAGR (2022-26) of 50%. Pet Foods Business would benefit from the wider distribution and supply chain network of Nestle India Limited to effectively reach in 120+ towns and accelerate in Organized Trade, the FMCG major stated.
Nestle India manufactures internationally famous brand names such as Nescaf Maggi, Milkybar, Kit Kat, Bar-One, Milkmaid and Nestea and in recent years the company has also introduced products of daily consumption and use such as NestlMilk, NestlSlim Milk, NestlDahi And NestlJeera Raita.
Shares of Nestle India were up 2.22% to Rs 18,956.10 on the BSE.
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