Nestle India Q4 profit falls 20%, misses market estimates

Nestle India, the local arm of the world’s largest food and beverage company, reported a 20% drop in its fourth-quarter net profit, trailing market expectations, due to slower-than-expected growth in revenue and rising costs.

The maker of Maggi noodles posted a consolidated net profit of Rs 386.66 crore for the quarter ended December 2021, compared with Rs 483.31 crore a year earlier. Analysts expected a net profit of Rs 525-550 crore.

Nestle India follows the January to December financial year.

The company reported consolidated revenue from operations of Rs 3,559.78 crore for the quarter ended December 2021, up from Rs 3,260.7 crore a year earlier. Analysts had expected revenue to grow 10-12% to Rs 3,800 crore.

Nestle India’s shares were trading down 0.52% on the NSE on Thursday afternoon at Rs 18,129.90 apiece. The stock saw a sudden 2.1% decline below Rs 18,000 level due to a freak trade but quickly recovered.

Other Key Highlights

1) EBITDA stood at Rs 865.7 crore in Q4 against Rs 770 crore in the corresponding period last year. 

2) EBITDA margin stood at 23.15% versus 22.64% a year earlier.

3) Export sales declined to Rs 146.42 crore from Rs 1,56.82 crore in Q4 2020 and Rs 177.6 crore in Q3 2021. 

4)  Raw material costs increased to Rs 1,662.89 crore from Rs 1,488.49 crore in Q4 2020.

5) Purchase of finished goods increased to Rs 60.56 crore from Rs 45.58 crore in Q4 2020.

6) The Board declared a final dividend of Rs 65 per share. 

Management Commentary

Nestle India Chairman and Managing Director Suresh Narayanan said that 2021 was a very challenging year for the firm. While the company continued to witness broad-based double-digit growth, it remains under pressure due to a steep rise in costs of raw and packing materials.

“Growth in e-commerce was fuelled by new emerging formats such as ‘Quick Commerce’ and ‘Click & Mortar’. We have progressed firmly and resolutely on our RURBAN journey and this has borne fruit with strong rural growth performance in addition to sustained growth in smaller town classes and urban agglomerates,” said Narayanan.

“We continue to witness high inflation in our key raw and packaging materials, where many are at 10-year highs. However, we remain confident of our ability and competencies and will continue to make all efforts towards cost optimization and seeking systematic efficiencies to mitigate the impact,” he said.

Leveraging granular growth opportunities using the power of data and analytics is a core ambition of the business strategy, he added.

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