Nestle India Q2 net profit falls as higher costs eat away sales growth; here’s how much it earned in Apr-Jun

Nestle India today reported its second quarter net profit fell 4.31 per cent on-year, as higher costs of raw materials and stock purchases offset more than the growth in sales.

Nestle India Q2 net profit falls as higher costs eat away sales growth; here’s how much it earned in Apr-Jun
FMCG companies have been facing rising input costs and there have been a series of price hikes in the last few months. Image: Reuters

Nestle India today reported its second quarter net profit fell 4.31 per cent on-year, as higher costs of raw materials and stock purchases offset more than the growth in sales. Nestle India’s net profit was at Rs 515.34 crore in Apr-Jun, as compared to 538.58 crore in the same quarter previous year. Sales in the quarter grew 15.7 per cent on-year to Rs 4,006.86 crore, as against Rs 3,462.35 crore last year, the company said in exchange filings. FMCG companies have been facing rising input costs for raw materials, transportation, etc. and while there have been a series of price hikes in the last few months, companies are now squeezing their margins in order to maintain the ‘acceptable prices’ of goods.

Nestle India Q2 results highlights:

Net Profit: Rs 515.34 crore, down 4.31% on-year, from Rs 538.38 crore
Sales: Rs 4,006.86 crore, up 15.7% on-year, from Rs 3,462.35 crore
Cost of materials: Rs 1847.4 crore, up 24.9% on-year, from Rs 1478.4 crore
Purchase of stocks: Rs 78.97 crore, up 52.8% on-year, from Rs 51.65 crore
Employee expense: Rs 408.36 crore, up 7.93% on-year, from Rs 378.33 crore

Also read: FMCG firms bet on small packets to evade big inflation monster, drive growth

Suresh Narayanan, Chairman and Managing Director, Nestlé India said, “Our endeavour this quarter was to secure our ‘engines of growth’ in this inflationary context and to enable sharp overall business recovery when the pressures abate. The growth is broad based and while being primarily driven by pricing, has a healthy underlying volume and mix evolution.” Chief Executive Officer Mark Schneider said, “We limited the impact of unprecedented inflationary pressures and supply chain constraints on our margin development through disciplined cost control and operational efficiencies.” Price increases at Nestle had been implemented ‘in a responsible manner’, he added.

The FMCG company maintained that its milk products and nutrition category witnessed a double-digit growth across brands while MILKMAID led the way. In terms of confectionery category, KITKAT and Nestle MUNCH showcased strong double-digit growth. In beverages and foods categories, NESCAFE and Maggi Noodles showed good performance.

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