Nestle India is expected to report a subdued performance in June quarter due to Maggi noodles ban. In fact, last two months have been extremely difficult for Nestle owing to Maggi noodles controversy.
Net profit is seen falling 8.3 percent year-on-year to Rs 264 crore and revenue is likely to decline 2.8 percent to Rs 2,363 crore during the quarter, according to average of estimates of analysts polled by CNBC-TV18.
The company follows January-December as its financial year.
Analysts see hit of Rs 120 crore towards disposal of Maggi noodles inventory as one time write-off. Maggi noodles contributes 20-25 percent to total revenues which comes to Rs 500-625 crore per quarter. Hence, June quarter could see a hit of Rs 200-250 crore of loss in revenues.
Nestle’s ex-Maggi noodles sales may remain subdued with the sales growth at 5-8 percent, impacted by delayed recovery in urban demand and food safety concerns.
Packaged foods and baby nutrition category may see delay in volume recovery for Nestle while coffee portfolio may see slight improvement during the quarter.
Operating profit (earnings before interest, tax, depreciation and amortisation) may drop 6.9 percent to Rs 472 crore and margin may contract 80 basis points to 20 percent during the same period. Gross margin may improve due to lower raw material costs.
Despite low input costs, expenses are likely to increase on account of negative operating leverage. Higher other expenses for Q2CY15 may further pressure margins.
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