Packaged foods maker Nestle India on Thursday missed street estimates on both net profit and revenue for the June 2024 quarter amid inflationary pressures in coffee and cocoa.The Gurugram-based company reported a nearly 7% year-on-year (y-o-y) rise in net profit to Rs 747 crore, while revenue was up 3.3% y-o-y to Rs 4,814 crore. Bloomberg consensus estimates had pegged net profit at Rs 833 crore and revenue at Rs 5,135 crore for the period.
Earnings before interest, tax, depreciation, and amortisation (Ebitda) rose 5.6% in Q1 compared to the year-ago period, reaching Rs 1,114 crore, below street estimates of Rs 1,239 crore. Ebitda margins improved by 40 basis points to 23.1% in the quarter under review, compared to 22.7% reported a year ago.
In a statement post-announcement of its June quarter numbers, Nestle India’s chairman & MD Suresh Narayanan admitted that there was continued pressure with regard to food inflation and volatility in commodity prices, which hurt consumption growth.”Cereals and grains are going through a structural cost increase backed by MSP (minimum support price). Coffee and cocoa prices are at an all-time high. Though there is relative stability in milk prices, packaging, and edible oils,” Narayanan said, adding that almost a fourth of the company’s sales growth in Q1 was volume-led.
During the quarter, five out of the company’s top 12 brands recorded double-digit growth. The beverages business stood out with strong double-digit growth due to a heatwave across many parts of India.Prepared dishes and cooking aids, including Maggi, maintained growth momentum, with innovations contributing to about 30% of its sales growth, Narayanan said. “Maggi Korean Noodles has been well received by our consumers and Masala-ae-Magic saw double-digit growth. Kitkat too delivered double-digit growth. While milk products and nutrition maintained its momentum,” Narayanan said.
E-commerce sustained its upward trajectory, contributing to 7.5% of domestic sales and growing at double digits in Q1.The retail segment grew double digits, led by value-added noodles, beverages, and overall premiumisation. In the out-of-home (OOH) category, strong growth momentum was fuelled by portfolio transformation, innovations, penetration and premiumisation.In the export market, Nestle India expanded its footprint by introducing new stock-keeping units in markets such as the US, Canada, the West Asia and North Africa.Shares of Nestle India ended trade 2.49% down on the BSE to Rs 2,480.40 apiece on Thursday in a weak market.