Nestle India slips after Q1 PAT declines 1.2% YoY

21 Apr 2022 , 10:54 AM

Net sales jumped 9.7% to Rs 3950 crore in quarter ended March 2022 from Rs 3600 crore posted in quarter ended March 2021. The FMCG majors profit before exceptional items and tax fell 0.69% to Rs 806.2 crore in Q1 CY22 over Q1 CY21.

Total sales and domestic sales for the quarter ended March 2022 increased by 9.7% and 10.2% respectively. Domestic sales growth was broad based and largely driven by volume & mix. Export sales were lower by 1% largely due to change in product mix.

Nestle said profitability was impacted as Cost of materials consumed increased due to higher commodity prices, particularly edible oil, milk and its derivatives and packaging materials. Nestles total expenses rose nearly 13% year-on-year to Rs 3,195.9 crore in Q1 CY22 over Q1 CY21. Cost of raw material consumed increased by nearly 22% to Rs 1845.9 crore.

Commenting on the results, Suresh Narayanan, chairman and MD of Nestl? India said, ?I am pleased to share that in this quarter we have delivered double-digit domestic sales driven by volume and mix, which once again demonstrates the strength of our brands, consumer resonance and the resilience of the Nestl? India team and our partners. Our key brands continue to perform well with Maggi Noodles, KitKat, Nestl? Munch, Nescaf? Classic and Sunrise posting creditable double-digit growth in this quarter. This growth across a range of categories was enabled by a mix of innovative campaigns, attractive consumer promotions, analytics-based consumer insights, geo-targeted distribution drives and leveraging the opportunity of festive seasons. Our endeavour is to continue on the path of penetration led volume growth with determination. Our robust performance in e-commerce continued as the channel grew by 71% and now contributes 6.3% of domestic sales. As highlighted in previous quarters, cost of key raw and packaging materials are witnessing 10-year highs, and costs continued to surge this quarter which has impacted profit from operations. Continued inflation is likely to be a key factor in the short to medium term. We are confident of facing this turbulence with strategies of scale, efficiencies, mix and pricing all of which we will deploy judiciously.?

On a categorical basis, Nestle saw strong growth momentum continued in Noodles aided by media and mega portfolio activation. Maggi Sauces and Maggi Masala-aeMagic growth was impacted by high base and gradual shift from in-home cooking to outof-home consumption, with the progressive opening up of offices and schools.

Milk Products and Nutrition business performed well, coupled with pricing actions. Milk products continue to face challenges from competition. KitKat and Nestl? Munch, both registered double-digit growth. Nestle said strong performance was aided by media campaigns, strong festive interventions, attractive consumer promotions, trade inputs and focused distribution drives. Nescaf? Classic and Sunrise delivered double-digit growth, supported by generating demand inputs to leverage the consumption season.

Commenting on future outlook, Nestle said cost outlook for key commodities like edible oils, coffee, wheat, fuel remains firm to bullish while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs. Input costs are expected to be on bullish trend both globally and locally. The FMCG major further said that fresh milk costs are expected to remain firm with continued increase in demand and rise in feed costs to farmers.

Nestle India manufactures internationally famous brand names such as Nescaf?, Maggi, Milkybar, Kit Kat, Bar-One, Milkmaid And Nestea and in recent years the company has also introduced products of daily consumption and use such as Nestl? Milk, Nestl? Slim Milk, Nestl? Dahi And Nestl? Jeera Raita.

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