Nestle net profit up 7% as key brands register double-digit growth

The company had reported a net profit of Rs 698.3 crore in the year-ago period

Fast-moving consumer goods (FMCG) major Nestlé India's first-quarter profit missed analyst estimates even as it grew 6.9 per cent year-on-year to Rs 747 crore.

“Despite external challenges such as lower consumption growth, concerns on continued food inflation, and volatile commodity prices, we have delivered growth across our product groups," said Suresh Narayanan, chairman and managing director, Nestlé India.

The company's stock ended the day down 2.5 per cent on Thursday.

The maker of Kitkat chocolates and Maggi noodles reported a 3.3 per cent uptick in net sales to Rs 4,814 crore in the June quarter. The firm's profit before interest, depreciation, and tax (PBIDT) rose 6.9 per cent to Rs 1,153 crore from the year-ago period.

In its commodity outlook, the maker of Cerelac said commodity prices were seeing unprecedented headwinds in coffee and cocoa with all-time high prices and an ongoing price rally. “Cereals and grains are going through a structural cost increase backed by MSP (minimum support price). There is relative stability in milk prices, packaging, and edible oils,” it added.

Five of the company’s top 12 brands, such as taste enhancer Masala-Ae-Magic and Kitkat, registered double-digit growth, with the beverages business witnessing robust performance across products and delivering a double-digit growth amid a scorching summer across many parts of India. “Almost a fourth of our growth has been mix- and volume-led, and we hope to strengthen this in the coming months,” Narayanan added.

“The launch of (instant coffee brand) Nescafe Roastery has further strengthened our premium coffee portfolio. In our endeavour to build cold coffee as a strategic pillar, we successfully launched Nescafé ice roast with encouraging response across key markets and channels,” the release stated.

Innovations, the company said, contributed to 30 per cent growth in Q1. E-commerce too continued its upward trajectory, contributing to 7.5 per cent of domestic sales and growing at double digit.

With a focus on volume-led growth, the company expanded its village coverage by 5,000 this quarter, taking it to 205,000 villages in total, alongside adding over 800 distribution touchpoints that include cash distributors, re-distributors and wholesale hubs.