Nestle India Q2 Results: Net Profit Misses Estimates, Margin Contracts

Nestle India Ltd.’s quarterly profit fell, missing estimates, and margin contracted as raw material costs rose and the second Covid-19 wave hurt demand.

Net profit of the maker of Maggi instant noodles and Nescafé coffee declined 21% sequentially to Rs 457.6 crore in the three months to June, according to its exchange filing. That compares with the Rs 573.4-crore consensus estimate of analysts tracked by Bloomberg.

Revenue for Nestle India—that follows January-December fiscal—fell 16% over the previous three months to Rs 3,050.5 crore in the second quarter. Analysts had pegged the top line at Rs 3,523.9 crore. Its domestic sales fell 15.5% over the quarter ended March.

Q2 CY21 Highlights (QoQ)

• Operating profit fell 20% to Rs 747.6 crore, compared with the estimated Rs 874.9 crore.

• Margin contracted to 24.5% vs 25.6%.

• Exports fell 15.5%.

Nestle India has invested Rs 1,000 crore in India out of the Rs 2,600 crore planned over three-four years, it said. The company in October last year had said it would expand its existing facilities and start a new factory at Sanand, Gujarat.

• Domestic and export sales achieved double-digit growth year-on-year.

• Maggi Noodles, Kitkat, Nestlé Munch, Maggi Sauces, Maggi Masala-Ae-Magic have posted strong double-digit growth year-on-year.

• Commodity prices have been rising across oils and packaging materials.

• E-commerce channel grew 105% year-on-year and contributed 6.4% of domestic sales.

• In the first half of the year, its hyperlocal channel (which includes sales through platforms like Big Basket Daily, Super Daily, Milk Basket etc) grew 147%.

• Contribution of new product launches to its domestic sales is now at 4.9%.

Peer Hindustan Unilever Ltd.’s profit, too, fell 3.7% sequentially in the April-June period, while its revenue declined 1.8%.

Shares of Nestle India ended 1.2% lower before the results were announced on Wednesday, compared with the benchmark Nifty 50’s 0.2% fall.