Nestle India Ltd.’s third-quarter profit rose, beating estimates, after falling for the last three consecutive quarters, aided by rural growth, price hikes, and out-of-home consumption gaining momentum.
Net profit of the maker of Maggi instant noodles and KitKat chocolates—that follows calendar-year financial reporting—rose 8% over a year earlier to Rs 668.3 crore in the three months ended September, according to its exchange filing. That compares with the Rs 651.2-crore consensus estimate of analysts tracked by Bloomberg.
It is the first company from the FMCG pack to declare its quarterly results.
Q3 CY22 Highlights (YoY)
Revenue jumped 18% to Rs 4,591 crore, compared with the Rs 4,377-crore forecast.
Operating profit rose 7% to Rs 1,010.7 crore, against the projected Rs 991.53 crore.
Margin came in at 22% versus 24.4% on higher expenses. Analysts had pegged it at 22.7%.
Total expenses rose 21% to Rs 3715.4 crore.
Cost-of-materials consumed jumped 30% to Rs 1952.7 crore.
Nestle India’s domestic sales rose 18.3% over a year ago to Rs 4,361.2 crore, driven by volume and product mix while exports rose 15.7% to Rs 205.6 crore.
"We have witnessed the highest sales growth during a quarter in the last five years on continued strong volume and mix evolution with broad-based double-digit growth across categories," said Suresh Narayanan, chairman and managing director at Nestle India. "Growth has been very strong in the large metros and mega cities and continued to be robust across smaller town classes including rural markets."
The proliferation of Indian product portfolio in new markets and expanding new categories, especially wider offerings in MAGGI and confectionery remain key focus, the company said in a statement.
E-commerce sales contributed 7.2% to the total sales in Q3, fuelled by emerging formats such as quick commerce and click-and-mortar. The company also announced the launch of its first-ever direct-to-consumer platform in Delhi-NCR region with gradual expansion across other parts of the country. This move is likely to further accelerate digital sales contribution over the medium term, the statement said.
All categories including confectionary, beverages, milk products and nutrition as well as prepared dishes saw "strong" growth, the company said.
Nestle India said it is witnessing early signs of stability in the prices of a few commodities such as edible oils and packaging materials. "However, fresh milk, fuels, grains, and green coffee costs are expected to remain firm with the continued increase in demand and volatility."
The Board declared a second interim dividend of Rs 120 per share for 2022, amounting to Rs 1,157 crore, which will be paid on and from Nov. 16, 2022. This is in addition to the first interim dividend of Rs 25 per equity share paid on May 6, 2022.
Shares of Nestle India were trading 0.98% higher after the results were announced, compared with a 0.4% gain in the benchmark Nifty 50.
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