Nestle India Q2 Results: Margin Misses Estimates As It Slips To 2022 Levels

Nestle India Ltd.'s net profit fell marginally in the second quarter of financial year 2025, meeting analysts' estimates, showed the company's quarterly earnings announced on Thursday.

Net profit of the maker of Maggi instant noodles and KitKat chocolates decreased 0.9% year-on-year to Rs 899.49 crore in the three months ended Sept. 30, 2024, according to an exchange filing on Thursday. That compares with the Rs 882-crore consensus estimate of analysts tracked by Bloomberg.

Margins contracted to 22.9% to hit 2022 levels.

• Revenue up 1.3% to Rs 5,104 crore versus Rs 5,037 crore (Bloomberg estimate: Rs 5,243 crore).

• Ebitda down 4.7% to Rs 1,168 crore versus Rs 1,226 crore (Bloomberg estimate: Rs 1,302 crore).

• Margins at 22.9% versus 24.3% (Bloomberg estimate: 24.4%).

• Net profit down 0.9% at Rs 899.5 crore versus Rs 908 crore (Bloomberg estimate: Rs 882 crore).

Management highlighted challenging demand environment with muted consumer demand. Domestic sales were flat year-on-year at Rs 4,880 crore. Export sales were at Rs 1,900 crore, up 3% YoY.

Gross margin was flat at 56.6% YoY and down 102 bps QoQ and in line with EE. Commodity prices remained elevated, specially for coffee and cocoa and relative stability in milk prices and packaging so far.

Five of the top 12 brands grew at DD. However, some key brands witnessed pressure due to softer consumer demand and the company is focusing on them.

Prepared Dishes and Cooking Aids: Strong momentum in premiumising the portfolio through innovations. Launched Maggi chatpata Besan noodles.

Milk Products and Nutrition: Launched Milkmaid mini and increased investments in advertising.

Confectionery: Continued to leverage youth passion points with a fun partnership with ‘Candy Crush’. Munch continued to gain inroads into regional markets by focusing on providing superlative value to consumers.

Beverages: High double-digit growth driven by Nescafe Classic, Nescafe Sunrise, and Nescafe Gold. Milkmaid also reported high double-digit growth.

Petcare Business: Strong e-commerce momentum. Felix and Friskies cat food continued to receive positive feedback from trade and cat parents. Building on the superpremium pillar, Pro Plan dog food witnessed strong growth.

E-commerce: Continued accelerated growth by almost 38%, primarily driven by quick commerce and fueled by brands such as Kitkat, Nescafe, Maggi and Milkmaid. Growth was supported by premiumisation, new user acquisition, festive participation and targeted digital communications.

Organised Trade: Delivered growth spurred by noodles, beverages and overall premiumisation.

Out of Home: Growth propelled by portfolio transformation, premiumisation, new customer acquisition and driving reach beyond metros.

Exports: Continued to expand its footprint by introducing new SKUs across categories to Canada, Middle East, Maldives and Papua New Guinea.

Nestle India Ltd.'s share price dropped 4% on Thursday after the company reported its second quarter numbers.