Bengaluru: The India-arm of the multinational FMCG company Nestlé posted a 7 per cent rise in net profit at Rs 746.6 crore for FY25’s first quarter ended June. This fell short of the analysts’ expectations pegged at Rs 816 crore, as per LSEG data.
Its profit from operations increased 3.3 per cent to Rs 4,814 crore from Rs 4,658.5 crore on a year-on-year (YoY) basis.
“Despite external challenges such as lower consumption growth, concerns on continued food inflation and volatile commodity prices, we have delivered growth across our product groups. Almost a fourth of our growth has been mix and volume-led, and we hope to strengthen this trend in the coming months,” said Suresh Narayanan, Chairman and Managing Director, Nestlé India.
Narayanan also added that five of the company’s top 12 brands grew double-digit, while its beverages business reported strong double digit growth. The prices of coffee and cocoa have also seen unprecedented headwinds, touching all time high prices coupled with a continuous rally.
Interestingly, price rise is what analysts are faulting for the company’s underwhelming performance.
“Volumes were a miss and the results don’t add up to any major positives. So it’s weak set of numbers,” said Preeyam Tolia, Senior Research Analyst at Axis Securities.
The packaged food manufacturer’s e-commerce sustained the upward trajectory and contributed 7.5 per cent to the domestic sales, growing at double digit. The out-of-home business also continued its growth momentum despite unprecedented headwinds of extreme weather conditions across India.
Nestlé India is on a stride to build its distribution infrastructure in RUrban geographies. Additionally, the company is quite focused on its rural growth , given that its village coverage increased by 5,000 taking the tally to around 2,05,000 villages, the media statement claimed.
Harish Bijoor, Brand Guru said, “Nestle is a strong brand and FMCG companies have to come up with a strong strategy, relook into mass brands and build them because there’s a cost pressure due to direct-to-consumer (D2C) brands.”
Analysts are betting on rural recovery and normal monsoon, suggesting a brighter and better second half for the Kit Kat maker.
“Nestle has invested in rural markets, so whenever a recovery happens on that front, it will see a positive impact. We expect this recovery to happen in second half led by normal monsoon, stable inflation and strong festive season,” added Tolia.
Nestle India dropped 2.4 per cent after disappointing first-quarter revenue and profit estimates.