Nestle India Q3 Results: Revenue Rises 11.7% On Out-Of-Home Consumption
Out-of-home consumption of packaged and ready-to-cook products boosts Nestle India's Q3 sales.
Nestle India Ltd.’s quarterly profit and revenue rose as demand for out-of-home consumption categories and ready-to-eat products begins to revive.
Revenue jumped 11.7% quarter-on-quarter to Rs 3,882.6 crore, according to its exchange filing. That compares with the Rs 3,890.8-crore consensus of analyst forecasts compiled by Bloomberg.
Net profit of the maker of Maggi instant noodles and Kit Kat chocolate, which follows calendar-year financial reporting, rose 14.6% over the preceding quarter to Rs 617.4 crore in the three months ended September. Net profit, however, rose 5.2% over the year ago period. That compares with the Rs 634.2-crore estimate.
“OOH channel is on a recovery path with gradual opening of hotels, restaurants, offices and malls," the company said in a statement. "There are signs of a return to pre‐pandemic levels of business traction in some geographies, categories and channels." Nestle India saw its power brands Kitkat, Munch and Milkybar posting high double-digit growth. It also reported robust double-digit growth in coffee led by increased penetration and high demand. The noodles category, too, saw healthy growth, while sauces saw “somewhat muted growth” due to decreased in-home consumption, a high base as well as increased competitive intensity.
The company’s domestic sales rose 11.5% sequentially to Rs. 3,687.35, while exports grew 12.9% at Rs. 177.6 crore. On a year-on-year basis, exports grew 1.3% while domestic sales growth was at 10.1% driven by volume and mix.
"This quarter has once again seen the company deliver ‘double‐digit broad‐based value growth’ in domestic sales across categories," Suresh Narayanan, chairman and managing director of Nestle India, was quoted as saying in a statement.
"Organised trade witnessed a resurgence in the third quarter with strong revenue growth in mid‐20s after a muted second quarter which was impacted by the pandemic second wave," he said. The e‐commerce channel, Narayanan said, showed strong acceleration on the back of convenience and pandemic driven consumer behaviour. Nestle not just sustained double-digit growth in metros but also small towns. “This reinforces our belief in the power to unlock the potential of small towns with our relevant portfolio,” said the Nestle India chief.
Other Highlights
Operating profit rose 11.8% to Rs 948 crore sequentially, compared with the estimated Rs 957.1 crore.
Margin came in at 24.4% versus 24.4% over the preceding three months amid rising commodity prices across oils and packaging materials.
In the short to medium term, the price outlook for key categories like wheat, coffee, edible oils remains firm to bullish, while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs.
Fresh milk prices are expected to remain firm with continued increase in demand and a rise in feed costs to farmers.
The recent announcement of scrapping import duties on edible oils, if continued next year, beyond March 2022, can have positive impact in muting food inflation pressures
Nestle will keenly look for opportunities for cost optimisation and efficiencies as we have successfully done in the past.
The company said Maggi noodles and Polo have been recently introduced in the Middle East market, while Crunch Wafers have been launched in ASEAN markets. Its total expense rose 11% year-on-year to Rs. 3,081.99 crore in the quarter under review.
Shares of Nestle India ended largely flat before the results were announced compared to a largely unchanged Sensex. The packaged food company's stock has risen 5.2% so far this year.