Nestle India reports 50% rise in net profit

Nestlé India, the local arm of the Swiss packaged goods company Nestlé SA, reported on Friday a 50% increase in its net profit for the quarter ended in June, beating analysts’ estimates. The rise in profit to Rs 395 crore from Rs 263 crore in the year-ago period was due to lower commodity prices and cost-efficiency measures, said the company, which follows the January-December financial year.

A Reuters poll had estimated the company’s net profit for the June quarter at Rs 371.5 crore.

Operating revenue of Nestlé India, known for its products such as Maggi noodles and KitKat chocolates, rose 8.6% from Rs 2,484.73 crore to Rs 2,698.40 crore.

“The market momentum continued to be favourable and I am pleased that we have sustained our broad based volume growth across categories,” said Suresh Narayanan, chairman and managing director, Nestlé India. “There is an improvement in margins due to favourable cost of commodities and cost efficiency programmes. However, we are now witnessing headwinds in commodity prices,” he added.

The company said domestic sales for the quarter increased 8.0%. “The growth rates are adversely impacted due to lower reported sales by the change in structure of indirect taxes and reduction in realisations to pass on the GST benefits. On a comparable basis, domestic sales growth is ‘estimated’ at 14.5% supported by increase in volumes on a base impacted by softer trading ahead of the rollout of the goods and services tax,” it said.

In order to realise volume-led growth and cater to the health conscious consumer, Nestlé India has been launching a slew of new products which includes multigrain breakfast cereal NesPlus and ready-to-drink Nescafe.