Rising Costs Limit Nestle India’s Bottomline Growth In Q4
Strong volumes in domestic sales caused Nestle India’s January-March net sales to rise
Nestle India Ltd.’s net profit in the March quarter grew 6.9 percent, year-on-year, to Rs 306.7 crore, missing analyst estimates. Rising costs weighed in on the bottomline.
The food and beverage major’s sales rose 9.5 percent to Rs 2,592 crore, which the company attributed to the a rise in domestic volumes in the first quarter and its instant noodles Maggi catching up on lost momentum, after being banned for some time last year.
Exports remained largely flat growing by just 0.6 percent to Rs 166.4 crore as sales dropped in Nepal and Bhutan, said the company in its stock exchange filing.
Nestle India’s operating margins contracted to 20.3 percent from 23.1 percent in the corresponding quarter last year, as a rise in raw material and employee costs weighed on margins.
The company’s gross margins also contracted by 50 basis points to 57.8 percent.
I am happy with the increased volume based growth, across categories, during the first quarter of 2017. Innovation and renovation , as also volume based growth, are core business strategies outlined by Nestle India almost 18 months back and I am pleased that this strategy is now playing an important role.Suresh Narayanan, Chairman and Managing Director, Nestle India Ltd.