Nestle India

The net sales for Q3 CY11 has increased by 20% to Rs 1969.27 crore. Net domestic sales increased by 21% to Rs 1877.15 crore on back of volume and selling price. The export sales inclined by 5% to Rs 85.95 crore. Export growth has been adversely impacted by the ban on export of milk powder. The OPM has inclined by 70 basis points to 20.8%. The higher commodity prices were offset by an improved product/channel mix and operational efficiencies. The profit before tax before EO has increased by 23% to Rs 375.72 crore.

Management Comments

Commenting on the results  Mr. Antonio Helio Waszyk , Chairman and Managing Director

We have again for the 19^th consecutive quarter delivered double digit profitable growth. Whilst we continue to build our position for the future, our expansion of manufacturing capacities is providing market share gains to our already strong market positions. In such a volatile and uncertain environment, optimization of portfolio; prioritization of sales channels; management of price coupled with Nestlé Continuous Excellence has further strengthened our position as the leading Nutrition, Health and Wellness food company in India. I am happy that our strategy is working, especially thanks to our people and business partners

For quarter ended September 2011

The net sales have increased by 20% to Rs 1969.27 crore. Net domestic sales increased by 21% to Rs 1877.15 crore on back of volume and selling price. The export sales inclined by 5% to Rs 85.95 crore. Export growth has been adversely impacted by the ban on export of milk powder.

The OPM has inclined by 70 basis points to 20.8% due to fall in raw material cost by 190 basis points to 43.7% and other expenditure by 80 basis points to 24.7% of adjusted net sales. The higher commodity prices were partially offset by an improved product/channel mix and operational efficiencies The operating profit has increased by 24% to Rs 410.3 crore.

Other income has inclined by 10% to Rs 5.92 crore due to higher yields partially offset by lower average liquidities. Interest amount stood at Rs 1.15 crore. Interest cost is after reducing interest earned of Rs 0.88 crore on liquidities arising from timing difference between draw down of ECB and utilization thereof ; and cost of ECB of Rs 37.75 crore and MTM loss of Rs 15.3 crore. Depreciation has increased by 29% to Rs 39.35 crore. The profit before tax before EO has increased by 23% to Rs 375.72 crore.

There was EO expenses of Rs 1.19 crore on account of provision for contingencies (net). Total tax outgo has increased by 35% to Rs 113.35 crore due to rise in effective tax rate at 30% from 28% due to reduced income tax holiday of Pantnagar factory. The net profit has increased by 20% to Rs 261.18 crore.

For nine months ended September 2011

The revenue has increased by 21% to Rs 5551.76 crore. Net domestic sales increased by 22% to Rs 5232.58 crore due to improved volume and realization. The export sales have also increased by 9% to Rs 303.56 crore.

The OPM inclined by 10 basis points to 20.5%. As a result, the operating profit has increased by 21% to Rs 1136.86 crore.

Other income has inclined by 20% to Rs 17.2 crore due to higher yield. Interest cost has increased by 86% to Rs 1.8 crore. Depreciation has increased by 18% to Rs 108.73 crore. As such, the profit before tax before EO has inclined by 22% to Rs 1042.34 crore.

There was EO expenses of Rs 1.19 crore on account of provision for contingencies (net). Total tax outgo increased by 30% to Rs 311.62 crore. The net profit has increased by 19% to Rs 730.72 crore.

Other Developments

During the quarter US $ 25 mn were withdrawn from Nestle SA for 5 yrs under the approval from RBI. The total amount outstanding as at 30^th Sept. 2011 is US $ 85 mn and YTD cost of this borrowing including interest and exchange difference is Rs 42.15 crore.

Valuation

The scrip was trading at Rs 4498.65 on 4^th November 2011 at BSE.

The promoter holds 62.77% stake in the company.

Nestle India: Results