Growth in revenue came mainly from broad-based domestic sales growth which increased by 10.1 percent and was largely driven by volume and mix.
FMCG giant Nestle India on October 19 reported a profit after tax (PAT) of Rs 617 crore for the quarter ended September 2021 (Q3FY22), a growth of 15 percent from Rs 538.6 crore reported in the previous quarter. Profit grew by 5 percent on a year-on-year (YOY) basis from Rs 587.1 crore.
It must be noted that Nestle India follows a January to December financial year.
Revenues came in higher by 12 percent at Rs 3,882.6 crore for the quarter, compared to Rs 3,476.7 crore in June 2021 quarter. On a YOY basis, the numbers grew by 10 percent from Rs 3,541 crore.
Growth in revenue came mainly from broad-based domestic sales growth which increased by 10.1 percent and was largely driven by volume and mix. Exports witnessed a marginal growth of 1.3 percent.
“This quarter has once again seen the Company deliver ‘double‐digit broad‐based value growth’ in domestic sales across categories. Organized trade witnessed a resurgence in the third quarter with strong revenue growth in mid‐twenties after a muted second quarter which was impacted by the pandemic second wave”, commented Mr. Suresh Narayanan, Chairman, and Managing Director.
He further said the e‐commerce channel showed strong acceleration on the back of convenience and pandemic driven consumer behaviour, fully leveraged by a team who used the power of meaningful shopper insights, data analytics, speed, flexibility, sharp communication and customisation for the channel at scale.
The company witnessed an overall broad-based double-digit growth not only in large metros but also in small towns owing to smart management of its product portfolio relevant to the specific markets. The company said it was laying strong emphasis on the customised portfolio, enhanced distribution infrastructure and deployment of resources, localised communication, enhanced visibility and building consumer connect.
“This sustainable growth is a testimony to the unwavering determination, commitment, and resolute focus of our people and partners towards being a ‘Force for Good’”, expressed Narayanan.
EBITDA margins at 25.3 percent declined marginally by 60 bps on a YOY basis and were flat on a sequential basis. The company was able to mitigate the rise in commodity prices, especially edible oils and packaging materials with better realisations. This is visible in the marginal rise in the cost of materials consumed as a percentage of sales.
Business Segment Performance
The company expects its e-commerce business to continue to grow and is witnessing a lot of traction in this segment. E‐commerce as a channel is developing new models like Quick Commerce (hyper‐local) leading to lower delivery lead times, effectively improving the shopper experience.
Organised trade for the company witnessed a broad-based growth across all food and beverages categories especially coffee and confectionary due to a decrease in pandemic intensity and increased vaccination across India.
"Out of Home (OOH) business is witnessing a pick-up in demand with the opening up of Hotels, Offices, and Malls with some geographies already seeing demand at pre-pandemic levels," the company said.
It launched Maggi Noodles and Polo in export markets of the Middle East and Crunch wafers in the ASEAN region.
Product Category Performance
The company witnessed a high single-digit volume and mix growth in all its product categories in the domestic market.
Prepared Dishes and Cooking Aids: This category witnessed good growth on the back of continuing momentum and improved availability. Growth was more prominent in Maggi Noodles and Maggi Masala-ae-Magic, while the growth in Maggi Sauces was muted due to lower pickup by retail customers and higher competition.
Milk Products and Nutrition: Toddler range (CEREGROW, NANGROW) and MILKMAID posted strong double-digit growth.
Confectionery: Intensive media campaigns and consumer promotions aided the chocolate brands like Kitkat, Munch, and Milkybar to achieve high double-digit growth.
Beverages: Nescafe Classic also grew in strong double digits due to sustained demand, better penetration, and visibility.
The company commissioned its ninth plant in India in Sanand this quarter. Narayanan expressed his happiness on this milestone, saying “With over 60 percent of the factory workforce being women, it is the largest contingent of any such workforce of the Company. This will rank amongst the highest proportion in the manufacturing sector in India. Equipped with the state‐of‐the‐art biomass boiler, Sanand factory aspires to be a zero‐carbon emission unit.”
The company declared a second interim dividend for 2021 of Rs 110.00 per equity share (Face value Rs 10/- per equity share) which will be paid on and from November 16, 2021. This is in addition to the first interim dividend of 25.00 per equity share paid on May 19, 2021.
In the short to medium term, the company expects the raw material costs (wheat, edible oils, coffee) to remain high while packaging costs are expected to move northwards amid supply constraints and rising fuel costs.
The stock closed at Rs 19377.50 today on the BSE, down Rs 49.75 against its previous day’s close. It has generated returns of 20.4 percent over the past one year, 5.3 percent in this financial year, 9.1 percent during the last three months and -4 percent in the past one month.