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Maggi or Milk — what did Nestle sell most during the lockdown?

We take a look at FMCG major Nestle India’s quarterly results to find out which of its product categories performed well.

July 28, 2020 / 08:56 PM IST

Nestle India, which, among other things, sells Maggi noodles, dairy products, coffee and chocolates, had a mixed April-June quarter, with profit rising 11.1 percent year-on-year to Rs 486.6 crore but earnings missing analyst expectations.

The company, which follows a January-December financial year, announced its results April-June 2020 results on July 28.

Sales were boosted by a surge in “in-home consumption” of products such as Everyday Dairy Whitener, Nestlé a+ Milk, and its other milk-based portfolio products, including two variants of coffee — Nescafe Classic and Nescafe Sunrise — in the first quarter.

The company, however, did not reveal individual sales numbers for the various categories.

Maggi rakes it in

Maggi, Nestle India’s signature product, also witnessed robust growth towards the end of the quarter after initial supply constraints, the company stated in an earnings press release. It was among the first products to fly off the shelves at supermarkets immediately after the lockdown was first announced in March.

The COVID-19 outbreak has driven up consumption in the ready-to-cook category. Noodles have always been in great demand and now, with the lockdown being extended twice, noodle makers have had to assure consumers on the availability of products, after a shortage was witnessed last month.

The company refrained from revealing Maggi’s share in the noodles segment but analysts say it commands close to 50 percent of the market. The 'milk and nutrition’ category, however, is bigger than Maggi Noodles in Nestle India’s portfolio.

Missing expectations

The FMCG major’s June quarter earnings missed analyst expectations even as profit grew 11.1 percent year-on-year to Rs 486.6 crore. COVID-19-induced lockdowns disrupted its value chain and a fall in other income (by 48 percent) took a toll. However, this was mitigated somewhat by lower tax costs.

Revenue from operations during the quarter increased 1.7 percent to Rs 3,050.48 crore compared to the same period last year.

Domestic sales increased 2.6 percent YoY to Rs 2,907.74 crore, but exports fell 9.3 percent to Rs 133.71 crore in the June quarter.

“Sales were adversely impacted due to the Covid-19 induced lockdown, leading to production disruption across factories,” Nestle India said in its BSE filing.

“The past three months have witnessed volatility, uncertainty and stresses that we had never imagined before nor experienced. This led to disruptions across the value chain of the company that has impacted our results, though we have built back momentum strongly as we ended the quarter,” the company said in an earnings press release.

“Relentless efforts, determined professional actions and abiding teamwork has led us to restore our eight factories almost to their pre-COVID manufacturing capabilities and our distribution capacity goes from strength to strength,” it added.

The company delivered a strong performance in the e-commerce channel, which grew by 122 percent in Q1 of FY21 and now contributes 3.6 percent to domestic sales.

On the operating front, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 4.9 percent year-on-year to Rs 747.6 crore, lower than the CNBC-TV18 poll estimate of Rs 773 crore. The margin widened by 80 bps to 24.5 percent YoY in the quarter ended June 2020.

Himadri Buch
Himadri Buch
first published: Jul 28, 2020 08:56 pm