Nestlé India's Q1 profit falls 13% on higher input prices

Nestlé India has registered a 13% year-on-year drop in consolidated net profit in the second quarter this fiscal. The consolidated net profit of the FMCG conglomerate dropped to ₹646.59 crore in June quarter, from ₹746.60 crore in the year-ago quarter.

This comes amid rising product costs and overall expenses of the giant. Total expenses rose 9% to ₹4,199.73 crore from ₹3,844.01 crore during the same period. Costs of materials consumed rose almost 11% to ₹2,153.25 crore from ₹1,943.22 crore last year.

“The quarter was impacted by elevated consumption prices across the commodity portfolio. In addition, we witnessed higher operations costs as a result of significant expansion in manufacturing in the last seven to eight months. Moreover, borrowing from commercial banks to fund temporary operational cash-flow requirements resulted in higher finance costs in the quarter,” said Suresh Narayanan, CMD, Nestlé India on the results.

Meanwhile, revenue from sale of products rose 5.8% to ₹5,073.96 crore in the June quarter, from ₹4,792.97 crore in the same quarter last year. Total consolidated income rose 5% to ₹5,100.20 crore from ₹4,853.07 crore. Domestic Sales grew at 5.5% and Sales EBITDA stood at 21.7%.

Across commodities, management shared that prices for edible oil and cocoa are expected to stabilise, with declining coffee prices, and modest increase in milk prices. The company also saw strong double-digit growth in Powdered and Liquid Beverages as NESCAFÉ gained market share and expanded both affordable and premium offerings. The company also shared that the Ready-to-Drink (RTD) segment also grew strongly. MAGGI noodles and Masala-Ae-Magic drove double-digit volume growth in the Prepared Dishes and Cooking Aids category.

Meanwhile, driven by heightened quick commerce demand and new product launches, e-commerce contributed 12.5% to domestic sales.

In other news, Manish Tiwary will take over as the new MD and CEO of Nestlé India starting August 1, following the retirement of Suresh Narayanan later this month, as announced in October last year.

Shares of Nestlé India at 11:59 AM declined 5.18% to ₹2,325.50 on the NSE. During intraday trade, the shares dropped as much as 5.25% to a low of ₹2,323.60, down from the previous close of ₹2,452.50. The stock has risen as much as 13% year to date.