Nestlé India profit falls 1.2% in March quarter

Nestlé India on Thursday reported a 1.25% year-on-year drop in its net profit in the January-March quarter. The fast moving consumer goods company posted a net profit of ₹595 crore in the first three months of 2022 compared with ₹602.25 crore in the same period last year. The FMCG major's profit stood at ₹387 crore in the quarter ended December 2021.

The company clocked a 10.2% year-on-year jump in revenue from operations to ₹3,980.7 crore during the quarter. That compares with revenue from operations of ₹3,610.8 crore in the year-ago period.

"In this quarter we have delivered double-digit domestic sales driven by volume and mix," said Suresh Narayanan, chairman and managing director, Nestlé India.

Prices of key raw and packaging materials have witnessed 10-year highs, and costs continued to surge this quarter, impacting profit from operations, the FMCG major said, adding that continued inflation is likely to be a key factor in the short to medium term.

Nestlé cautioned that cost outlook for key commodities like edible oils, coffee, wheat and fuel remains firm to bullish, while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs. "Input costs are expected to be on bullish trend both globally and locally. Fresh milk costs are expected to remain firm with continued increase in demand and rise in feed costs to farmers."

The company, according to Narayanan, is confident of facing this turbulence with strategies of scale, efficiencies, mix and pricing all of which we will deploy judiciously.

"Our key brands continue to perform well with Maggi Noodles, KitKat, Nestlé Munch, Nescafé Classic and Sunrise posting creditable double-digit growth in this quarter," Narayanan said.

This growth across a range of categories was enabled by a mix of innovative campaigns, attractive consumer promotions, analytics-based consumer insights, geo-targeted distribution drives and leveraging the opportunity of festive seasons, the company said.

"We have continued to progress well on our RURBAN journey and this has borne fruit with strong sustained rural growth performance, complemented by strong growth in smaller town classes and urban agglomerates. Our robust performance in e-commerce continued as the channel grew by 71% and now contributes 6.3% of domestic sales. We will continue to leverage e-commerce further through meaningful shopper insights, data analytics, speed, sharp communication and customisation,": Narayanan said.

The company said its e-commerce channel showed strong acceleration with growth being largely fuelled by new emerging formats like "quick commerce" and "click and mortar".

On exports, Nestlé said its continuous focus remains towards proliferation of Indian product portfolio in new markets; expanding new categories like confectionery and its offerings with Maggi range, fuelled with channel expansion in mainstream in the United Kingdom and Australia.