Nestle Q4 Results: Profit Up 4.4%, Misses Estimates

Nestle India Ltd.’s fourth-quarter profit rose, but missed estimates.

Net profit of the Maggi instant noodles maker—that follows calendar year financial reporting—rose 4% over a year earlier to Rs 655.6 crore in the three months ended December, according to its exchange filing. That compares with the Rs 746.84-crore consensus estimate of analysts tracked by Bloomberg.

The company incurred a one-time loss of Rs 107.3 crore on account of change in cost of servicing the defined pension benefit, impacting the quarterly profit. Profit before exceptional items and tax stood at Rs 993.78 crore.

Nestle India will now follow the financial year that runs from April 1 to March 31, instead of January through December. The company's current fiscal will be extended until March 31, 2024—which will span a period of 15 months from Jan. 1, 2023, to March 31, 2024.

Nestle India Q4 CY23 Key Highlights (YoY)

• Revenue rose 8.1% to Rs 4,600.42 crore (Bloomberg estimate: Rs 4,708.9 crore).

• Ebitda grew 13% to Rs 1,095.12 crore (Bloomberg estimate: Rs 1,122.35 crore).

• Margin stood at 23.8% versus 22.9%, exactly in line with estimates.

• Cost of raw materials consumed dipped 1.4% to Rs 2,006 crore.

During the quarter, Nestle India’s domestic sales increased 8.9% over a year earlier to Rs 4,421.8 crore, while exports dipped 5.6% to Rs 171.4 crore.

Domestic sales grew on the back of pricing and mix, with strong growth momentum in e-commerce and out-of-home channels, Suresh Narayanan, chairman and managing director of Nestle India, said in a statement.

E-commerce contributed to 7% of domestic sales in this quarter.

For calendar year 2023, the company's overall sales rose 13.3% from last year and crossed the mark of Rs 19,000 crore.

All key brands have contributed to Nestle India’s consistent growth trajectory, said Narayanan.

• Beverages witnessed double-digit growth. Nescafe gained significant market share and increased household penetration.

• Milk and nutrition product group posted double-digit growth.

• Prepared dishes and cooking aids maintained "creditable" growth.

• Confectionery, one of Nestle's strong growth drivers—led by Kitkat and Munch—delivered good growth.

Sharing outlook on commodity trends, Nestle India said that coffee prices continue to be volatile and are historically high due to limited availability.

Raw materials such as wheat and rice are stable as of now, and healthy milk flush in winter is expected to keep prices stable.

However, rain deficit is expected to impact the production of maize, sugar, oil seeds and spices, impacting pricing.

Nestle India has been expanding its reach in small towns and villages, a strategy it terms "Rurban". The company has added 5,300 villages this quarter, now reaching a total of over 1.96 lakh villages.

"We are very pleased with an uptick in sales in our Rurban markets which has sustained despite the challenging environment," Narayanan said.

The board of directors approved a third interim dividend of Rs 7 per equity share, with a face value of Re 1 each for financial year 2024. This amounts to Rs 674.91 crore, which will be paid on and from March 5, 2024.

Shares of the company closed 1.68% higher after the results were declared, as compared with a flat broader Sensex.