Nestle India’s net profit down 4% in Q2, revenue up 16%

Nestle India posted a net profit of ₹515.34 crore in the second quarter ended June 30, down 4.3 per cent against ₹538.58 crore in the corresponding quarter of the previous fiscal. Revenue from operations grew 16 .1 per cent to ₹4,036.6 crore. The company’s board approved acquisition of the pet foods business from Purina Petcare India Pvt Ltd through business transfer for ₹123.5 crore.

Purina Petcare India Ltd has been operating as a separate subsidiary of Nestle S.A in the country and this is a related party transaction.

Sales jump

Nestle India, which follows January-December period as fiscal year, said the total sales grew by 15.7 per cent and domestic sales grew by 16.4 per cent in the June quarter.

Speaking at an earnings call on Thursday, Suresh Narayanan, Chairman and MD, Nestle India, said the company’s focus during the quarter was to “protect the engines of growth” amidst inflationary pressures to ensure penetration-led volume growth continues. “ The growth is broad based and while was driven by pricing, has a healthy underlying volume and mix evolution,” he added.

“ We continued to see strong momentum across mega cities and metros. There was a acceleration across smaller towns on the back of our rurban strategy. Also, our focus on increasing distribution coverage in villages helped us see strong uptick in sales in rural markets although on a small base,” he added.

However, Narayanan added that the extraordinary inflationary pressures did make a small dent in the profits in the first half of the year.

The packaged food major said it is witnessing early signs of softening of prices of few commodities such as edible oils and packaging materials.” But prices of fresh milk, fuels, grains and green coffee costs are expected to remain firm with continued increase in demand and volatility,” he said adding that commodity headwinds are expected to persist for a while.

New categories

Narayanan said the ₹4,000-crore pet foods business, which is growing at 25 per cent offers strong growth opportunities with rising pet adoption in India across town classes post the pandemic. He added that the there are far greater synergies with evolution in channel strategies now than when the business was launched in 2018. “This is part of our strategy to focus on premiumisation opportunities. By leveraging Nestle India’s network, we will further accelerate the growth of the pet food business in India,” he added.

In the nutrition segment, the company also said its bringing its global brand Gerber to India in the toddler segment to tap into an estimated ₹3,500 crore market with Made-in-India and Made-for-India products.