FMCG giant Nestle India Ltd on Thursday reported a 4.31% drop in net profit to Rs 515.34 crore for the second quarter ended June 30 amid inflationary pressures.
The company, which tracks the fiscal year from January to December, had posted a net profit of Rs 538.58 crore in the corresponding period a year ago, Nestle India said in a regulatory filing.
However, Nestle India’s net sales increased by 15.72% to Rs 4,006.86 crore during the reporting period from Rs 3,462.35 crore a year ago, the company said.
Its total expenditure in the April to June quarter was Rs 3,355.59 crore, up 20.89% from Rs 2,775.68 crore a year ago.
Commenting on the results, its Chairman and Managing Director, Suresh Narayanan, said Nestle India continued to generate sales growth this quarter and crossed the 4,000 crore revenue mark for the first time.
“Our objective this quarter has been to secure our engines of growth in this inflationary environment and to enable a strong overall recovery in activity when the pressures ease. The growth is broad-based and while primarily price driven, it has a healthy underlying volume and mix development,” he said.
Nestle India’s domestic sales increased by 16.44% to Rs 3,848.44 crore from Rs 3,304.97 crore in the April to June quarter of 2021.
Its exports edged up by 0.66% to Rs 158.42 crore from Rs 157.38 crore a year ago.
The company’s dairy and nutrition category saw double-digit growth across all brands. Similarly, the confectionery category led by KitKat and Nestlé Munch recorded strong double-digit growth.
The beverage category also saw further double-digit growth across all channels, led by NESCAFÉ, and the food category also continued strong double-digit growth with improved market share from Maggi Noodles.
“We continued to see strong momentum in megacities and metros, as well as strong acceleration in smaller city classes. We are also encouraged by a smart increase in sales in rural markets this quarter, which bodes well a lot of credible momentum going forward,” Narayanan said.
Meanwhile, Nestle India has also announced its entry into the fast-growing pet food segment, acquiring the business of Purina Petcare India, another subsidiary of its Swiss parent company Nestle SA for a value of Rs 123. .5 crore.
According to Narayanan, the pet food segment has evolved very positively and has an exciting future with pet adoption on the rise post-pandemic.
“Going forward, leveraging the Nestlé India network would further accelerate the growth of Pet Food Business in India and for Nestlé India, a promising business would be part of its portfolio from the last quarter ending December 31, 2022,” said he declared.
For the first half of 2022, Nestlé India’s net sales increased by 12.67% to reach Rs 7,957.76 crore, compared to Rs 7,062.55 crore for the corresponding period of 2021.
While commenting on the commodity outlook, Narayanan said early signs of a slowdown in a few commodities like edible oils and packaging materials are being seen.
“Costs for fresh milk, fuels, grains and green coffee are expected to remain firm with the continued increase in demand and volatility,” he added.
Shares of Nestle India were trading at Rs 19,120.70 each on the BSE, up 3.11% from its previous close.