Nestle India Q1 profit rises 13% to Rs 525 cr, but margin contracts on higher milk price

Nestle India on May 12 has reported a 13.5 percent year-on-year growth in March quarter profit at Rs 525.43 crore, driven by lower tax cost.

Profit in same quarter last year was at Rs 462.74 crore.

Revenue from operations for the quarter grew by 10.7 percent year-on-year to Rs 3,325.3 crore supported by domestic and exports growth.

"Company remained resilient in the first quarter, as the numbers indicate, and delivered volume and mix led growth. Maggi, Kitkat and Nestlé MUNCH delivered strong performances. Contribution from E-commerce went up significantly, while out of home sector performance was subdued," Suresh Narayanan, Chairman and Managing Director said.

Domestic sales in Q1CY20 increased 10.7 percent to Rs 3,124.23 crore driven by volume & mix, company in its BSE filing said, adding exports rose 12.9 percent to Rs 181.55 crore YoY.

The company follows January-December as its financial year.

On the operating front, earnings before interest, tax, depreciation and amortisation (EBITDA) was up 5.4 percent YoY at Rs 793.3 crore in quarter ended March 2020, but margin contracted 121 basis points YoY to 23.85 percent in Q1 as commodity prices for milk and its derivates continued to be on the rise during the quarter.

Nestle has been on a fast-growing trajectory in the last six to seven quarters due to extensive launches.

In the year ended December 2019, Nestle had reported a 10.9 percent growth in domestic sales largely driven by volume & mix, while export sales decreased by 9.9 percent due to lower exports of coffee to Turkey.

The stock shot up 70 percent in the past year, while it gained nearly 19 percent year-to-date (2020) and was up 10 percent during the quarter ended March 2020.