Nestle shares fall over 5% after net profit declines 13% to ₹647 crore in Q1

Nestle India, the country's leading FMCG company which makes popular noodle brand Maggi, on Thursday, July 24, reported net profit of ₹647 crore in the first quarter of current financial year, marking a decline of 13% from ₹746 crore in the same period last year. The decline in profit came on the back of elevated consumption prices across the commodity portfolio, the company said in a regulatory filing.

Nestle's revenue from operations advanced 6% to ₹5,096 crore as against ₹4,814 crore in the year-ago period.

Nestle reported weak operational performance as its earnings before interest, taxes, depreciation, and amortisation (EBITDA) also known as operating profit declined 1.3% to ₹ 1,100 crore from ₹1,114 crore. Its EBITDA margin contracted by 160 basis points to 21.59%.

The quarter was impacted by elevated consumption prices across the commodity portfolio. In addition, we witnessed higher operations costs as a result of significant expansion in manufacturing in the last seven to eight months, Nestle India said in a press release.

"Maggi portfolio registered strong growth, with consumption trends showing positive signs of uptick. Both Quick Commerce as well RUrban contributed to the overall performance of the portfolio. Double Masala Classic Noodles as well Spicy range, which includes Spicy Garlic, Spicy Cheesy, Spicy Pepper and Spicy Manchurian generated positive momentum," Nestle India said.

Nestle India expects coffee prices to remain range-bound at lower levels going ahead as the upcoming Vietnam crop appears to be normal.

Cocoa and Edible Oil prices have stabilised and remain range-bound. Milk prices are anticipated to decrease with the onset of a favourable monsoon and flush season, Nestle India added.

The company also said that Manish Tiwary will take over as the Chairman and Managing Director of Nestle India from August 1.

“I am pleased to inform you that we have delivered a balanced growth in three out of our four product group categories. Prepared Dishes and Cooking Aids, Powdered and Liquid Beverages and Confectionery have bounced back to volume-led growth. Seven out of twelve top brands grew at double-digit," said Suresh Narayanan, Chairman and Managing Director, Nestle India.

Nestle's confectionery business saw high double-digit growth driven by robust underlying volume growth.

"KITKAT emerged as the largest growth driver, achieving double-digit growth, particularly in RUrban markets, while continuing to gain market share. MUNCH regained momentum with double-digit growth, and MILKYBAR too posted high double-digit growth," Nestle India said.

The Powdered and Liquid Beverages category sustained its position as one of the largest growth drivers with another robust performance this quarter registering strong double-digit growth.

Nestle India shares came under selling pressure after earnings announcement and the stock fell as much as 5.59% to hit an intraday low of ₹2,315 on the BSE.