Nestle Q1 net seen down 19%, Maggi re-launch may aid margin

Nestle India is expected to post net profit at Rs 260 crore in January-March quarter, down 18.8 percent from Rs 320 crore in corresponding quarter last fiscal. According to a CNBC-TV18 poll, the FMCG major may see revenue slipping 13.8 percent at Rs 2167 crore against Rs 2516 crore in year-ago period. Net profit may be impacted by costs related to restart Maggi Noodles. The company follows calendar year.

Sales decline may moderate in Q1CY16 due to few more Maggi variants released in the quarter. During the period, EBITDA may slip 27 percent at Rs 445 crore compared to Rs 610 crore while EBITDA margin is seen at 20.5 percent versus 24.2 percent year-on-year.  EBITDA margin will be impacted by start-up costs of noodles.

Analysts polled by CNBC-TV18 expect sequential improvement as Maggi is fully back online. However, high single digit revenue growth is expected without Maggi noodles in the basket. Revenue in culinary product is likely to decline given higher base. Exports business may also be soft due to Nepal issue.

Margins may expand sequentially as gross margin will be aided by lower sales of Maggi noodles. This is since Maggi noodles have relatively low margins. Advertising and promotion costs may be increased in the quarter.