Nestle India tanks 3% despite witnessing healthy Q1 earnings led by higher sales

In Q1FY21, Nestle posted a net profit of Rs486.60cr rising by 11.14% from Rs437.79cr recorded a year ago same period.

Jul 29, 2020 02:07 IST India Infoline News Service

Investors on Wednesday had a selling bias on Maggi-manufacturer, Nestle India after the FMCG announced its financial performance for June 2020 (Q1FY21) quarter. At around 2.11 pm, Nestle stock was trading at Rs16,595.20 per piece down by Rs503.75 or 2.95% on Sensex. The stock has plunged to an intraday low of Rs16,575.00 per piece.

In Q1FY21, Nestle posted a net profit of Rs486.60cr rising by 11.14% from Rs437.79cr recorded a year ago same period. Meanwhile, total sales increased to Rs3,041.5cr in the quarter under review as against Rs2,982.8cr in the same quarter last year.

Nestle in its audit report said, "Total Sales increased by 2.0%. Domestic Sales increased by 2.6%. Export Sales declined by 9.3%. Sales were adversely impacted due to the COVID 19 induced lockdown leading to production disruption across factories. Demand in Out Of Home channel was severely reduced".

Talking about the financial performance, Suresh Narayanan, Chairman and Managing Director, Nestlé India said, “In these extremely challenging times, at Nestlé, we hark back to our ‘Purpose’ which enshrines our inspiration for actions – ‘We unlock the power of food to enhance the quality of life for everyone, today and for generations to come’, and serves as our guiding light".

Narayanan further added, "The past three months have witnessed volatility, uncertainty and stresses that we had never imagined before
nor experienced. This led to disruptions across the value chain of the Company that has impacted our results, though we have built back momentum strongly as we ended the quarter".

However, Narayanan also said, "We delivered strong performance in the ‘e-commerce’ channel which grew by 122% this quarter and now contributes 3.6% to domestic sales. The demand in all ‘Out of Home’ consumption channels experienced a sharp decline due to the lockdown. However Nestlé brands enjoy trust, credibility and strength as far as “in home consumption” is concerned and this boosted sales of EVERYDAY Dairy Whitener, Nestlé a+ Milk, other milk based portfolio, NESCAFÉ Classic and NESCAFÉ Sunrise, all of which performed well this quarter. MAGGI also witnessed solid growth towards the end of the quarter after initial supply constraints".

Overall, Narayanan said, "we accelerated our digital engagements across key parts of our portfolio, put out innovative campaigns to
engage the consumers in many, while ensuring judicious application of marketing spends in line with the current business scenario."

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