Nestle India, a leading fast-moving consumer goods (FMCG) company, announced its financial results for the quarter ended June 2023. The company’s net profit for this quarter reached INR 698.34 crore, marking an impressive 37% increase compared to the INR 510.24 crore reported in the same quarter of the previous fiscal year.
During the mentioned quarter, total sales experienced a significant 15% year-on-year (YoY) increase, reaching INR 4,619.5 crore. Moreover, domestic sales for the period between April and June exhibited a strong growth rate of 14.6%.
According to the company’s filing with the exchanges, the profit from operations accounted for 20.7% of sales in the quarter that ended in June.
As per Nestle’s filing, the company, which operates on a January-December financial year, disclosed that its e-commerce vertical contributed 6.5% to its quarterly sales. This growth was sustained, driven by the momentum of quick commerce.
According to the company filing, the organized trade channel maintained its robust and broad-based growth across various categories. This growth was attributed to store expansion and increased footfalls. Additionally, the Out-of-Home (OOH) segment experienced strong growth by focusing on premiumization and implementing portfolio transformation initiatives.
The company reported that its Q2 exports demonstrated double-digit growth across all categories, driven by the increasing popularity of products like NESCAFÉ Sunrise and Polo.
“Strong performance is an outcome of kiosk expansion and prioritisation of emerging channels,” the company filing said.
Commenting on the earnings, the company’s Chairman and Managing Suresh Narayanan said that this was the fifth quarter in a row of double-digit growth across all product groups. “I am pleased to share that we have, yet again, delivered robust performance, with all product groups registering double-digit growth. Domestic sales growth is broad-based and grew by 14.6%, on the back of prudent pricing and supported by mix and volume with targeted brand support,” Narayanan said.
Key brands continued to perform well, led by Kitkat, Nescafe and Maggi, the MD highlighted.
Company’s expenses grew by 11% YoY to INR 3,743.15 crore in the June quarter from INR 3,369.81 crore with cost of material reported at INR 1,977.46 crore verus INR 1,847.42 crore in the year-ago period. However, benign commodity price in the reported quarter resulted in a 9% sequential drop in the cost of material consumed by the company.
Commodities such as edible oils, wheat and packaging materials have been in the lower price range. A reversal of price trend is noted in fuels with prices softening in second quarter after reaching higher level towards the end of quarter one. In fresh milk, there has been price stability. Robusta prices are elevated and are expected to remain volatile.