Nestle India Quarterly Results Update

On 21st April 2022, Nestle India announced its quarterly results for the period of Jan- March of FY2022.

Key Highlights:

Q1FY22 Performance updates:

- The company reported a total Sales of Rs.3,951 Crore with the total Sales Growth at 9.7%. 

- Domestic Sales Growth is at 10.2%. 

- Nestle India reported a Profit from Operations of 21.0% of Sales

- Net Profit of Rs.595 Crore

- Earnings Per Share of Rs.61.7 

Business Highlights:

- E-commerce: The channel showed strong acceleration with growth being largely fuelled by new emerging formats like ‘quick commerce’ and ‘click & mortar’ for the channel. 

- Organized Trade: The channel witnessed strong broad-based revenue growth as footfall normalized. 

- Out of Home (OOH): Despite COVID wave 3 impacting January sales, the OOH Business posted better than expected Q1 results mainly resulting from faster channel opening & due to continuation of the business-led revenue acceleration measure as per the agreed strategy (channel & geographical initiatives, portfolio transformation, etc.) 

- Exports: Nestle’s continuous focus remains on the proliferation of the Indian product portfolio in new markets; expanding new categories like confectionery and Nestle’s offerings with the MAGGI range, fuelled by channel expansion in the mainstream in the United Kingdom and Australia.

Category Performance:

- Prepared Dishes and Cooking Aids: Strong growth momentum continued in Noodles aided by media and mega portfolio activation. Maggi Sauces and Maggi Masala-e-Magic's growth was impacted by the high base and the gradual shift from in-home cooking to out-of-home consumption, with the progressive opening up of offices and schools. 

- Milk Products and Nutrition: Nutrition performed well, coupled with pricing actions. Milk products continue to face challenges from the competition. 

- Confectionery: KitKat and Nestlé Munch, both registered double-digit growth. The strong performance was aided by media campaigns, strong festive interventions, attractive consumer promotions, trade inputs, and focused distribution drives. 

- Beverages: Nescafé Classic and Sunrise delivered double-digit growth, supported by generating demand inputs to leverage the consumption season.

Commodity Outlook in Short to Medium Term: 

The cost outlook for key commodities like edible oils, coffee, wheat, and fuel remains firm to bullish while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs. Input costs are expected to be on a bullish trend both globally and locally. Fresh milk costs are expected to remain firm with a continued increase in demand and a rise in feed costs to farmers.

Dividend: 

The Board of Directors on 11th April 2022 have declared an interim dividend for 2022 of Rs.25.0 per equity share (Face value Rs.10/- per equity share) amounting to Rs.2,410.4 million, which will be paid on and from 6 May 2022 along with the final dividend for 2021 of Rs.65.0 per equity share approved in the Annual General Meeting on April 12, 2022.

Commenting on the results, Mr. Suresh Narayanan, Chairman, and Managing Director, Nestlé India said, “Our endeavor is to continue on the path of penetration-led volume growth with determination. We have continued to progress well on our RURBAN journey and this has borne fruit with strong sustained rural growth performance, complemented by strong growth in smaller town classes and urban agglomerates.

Our robust performance in e-commerce continued as the channel grew by 71% and now contributes 6.3% of domestic sales. We will continue to leverage e-commerce further through meaningful shopper insights, data analytics, speed, sharp communication, and customization. As highlighted in previous quarters, the cost of key raw and packaging materials is witnessing 10-year highs, and costs continued to surge this quarter which has impacted profit from operations. Continued inflation is likely to be a key factor in the short to medium term. We are confident of facing this turbulence with strategies of scale, efficiencies, mix, and pricing all of which we will deploy judiciously.” 

On Friday, the share price of Nestle India dropped by 0.76%.