 "Maggi impact: Nestle's December quarter net down 44% to Rs 183 cr")
Nestlé India’s net profit declined 44 per cent in the quarter ended December due to the absence of Maggi noodles in its product portfolio during the first half of the quarter. The beleaguered food major’s net earnings stood at Rs 183 crore compared with Rs 326 crore in the corresponding quarter last year. But it managed to improve its bottom line, compared with the previous two quarters. Nestlé posted net loss of Rs 64 crore in April-June 2015 and net profit of Rs 124 crore in July-September last year.
During the quarter, it posted Rs 1,946 crore net sales compared with Rs 2,516 crore last year — 22.6 per cent lower year-on-year (y-o-y). Nestlé’s net sales improved on a sequential basis. In the previous two quarters, the company posted Rs 1,736 crore and Rs 1,934 crore, respectively.
The ban on Maggi sales, which continued for nearly five months, was reflected in the company’s yearly performance. Nestlé registered Rs 8,132 crore of net sales for calendar year 2015 — 17.1 per cent lower y-o-y from Rs 9,806 crore. Its net profit plunged 52 per cent to Rs 563 crore compared with Rs 1,185 crore in 2014. The company follows a January-December financial year model.
“2015 has been a very tough year for Nestlé India where the impact of the Maggi crisis extended to not just our factories and employees but also hundreds and thousands of our partners, suppliers, farmers, retailers, and customers across the country whose livelihoods depended on the company,” Suresh Narayanan, chairman and managing director (MD), Nestlé India, said.
The controversy related to the poor quality of Maggi instant noodles started in the second half of May last year, which eventually led to a countrywide ban on its production, sales, and export, on June 5. Nestlé lost Rs 303 crore in net sales during 2015, the company informed the BSE.
The full impact of the absence of revenue from its flagship Maggi noodles was felt in the July-September quarter last year. The company re-launched the Maggi Masala variant during the December quarter, which has helped improve sales and profit, analysts said. Nestle re-introduced the chicken variant of the instant noodles on Thursday.
While, Nestlé’s domestic sales declined 24 per cent during the quarter to Rs 1,791 crore from Rs 2,358 crore y-o-y, its exports fell 2.2 per cent due to improved sales of milk and nutrition products, offsetting the impact of lower sales of Maggi during the quarter.
“The appointment of a new Indian MD (now also the chairman) was the right step taken to revive the Maggi brand. Under Narayanan’s leadership, we expect the company to remain open to new categories (potentially breakfast cereals, pet foods, water, and bigger portfolio of chocolates),” Abneesh Roy from Edelweiss Securities said.
