The companys domestic sales grew by 3.1 per cent, at Rs 485.3 crore from Rs 471 crore over the same period last year. According to the company release, domestic sales were negatively impacted by a selective rationalisation of pipeline stocks in certain geographies and products and by the lower availability of milk fat. While export sales during the quarter increased by 6.5 per cent in volume terms, they declined in value terms by 21.4 per cent over the same period last year. The export value of Rs 59 crore was lower mainly due to the shift towards low-realisation bulk coffee packs exported to Russia, Nestle India said.
According to Nestle India chairman and managing director Carlo Donati said, Market conditions have continued to be unfavourable but the current dip in the reported sales and profits also reflect the rationalisation of stocks that we have initiated within the company. Though these initiatives negatively impact us in the short term, they are necessary to maintain the high quality that Nestle guarantees the consumer. Nestle India is a healthy company and prudent management decisions are being implemented to sustain its health and make it even more robust in the future.
The companys adjusted net profit for the quarter decreased by 32.6 per cent. This was mainly due to decrease in Earnings Before Interest, Tax & Depreciation (EBITDA), higher tax cost resulting from a gradual phasing out of tax holiday benefits on exports, and lower other Income. EBITDA in the second quarter of 2003 was favourably impacted by 0.8 per cent of net sales, due to refund of levies in relation to earlier years. The adjusted EBITDA, as a percentage of net sales was 20.6 per cent in Q2, 2003, which has decreased to 15.4 per cent in Q2, 2004. This, the company said, was mainly due to the steep increase in commodity prices .