Nestle net profit up 23% on boost from domestic sales

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New Delhi: Noodles-to-chocolates maker Nestle India Ltd posted a 23% rise in profit for the quarter ended 30 September, buoyed by higher domestic sales.

Profit rose to Rs343.17 crore in the quarter, from Rs278.41 crore in the year-ago quarter, the Indian unit of Swiss packaged food maker Nestle SA said.

Total sales rose to Rs2,500.67 crore, of which the domestic market accounted for Rs2,340.75 crore during the quarter. Total sales for the year-ago period were Rs2,412.91 crore. Sales from exports rose 2.5% to Rs159.9 crore during the July-September quarter.

Nestle India said growth rates had been impacted by the “change in structure of indirect taxes”. Also, sales for the quarter ended 30 September 2017 are not comparable with the previous periods, it noted.

“On a comparable basis, the domestic sales growth is ‘estimated’ at 9.1% due to increase in volumes including rebuild of Maggi noodles, supplemented by better realizations coming from previous periods and netted by the price drops taken to pass on goods and services tax (GST) benefits to consumers,” Nestle India said.

Nestle India’s operating income increased 17.7% year-on-year, primarily led by a 350 basis points year-on-year reduction in other expenses. A basis point is one-hundredth of a percentage point.

“I am pleased with the sustained volume-led growth momentum across all product groups. The dedication and commitment of the team and our partners has ensured a smooth transition into the GST regime,” Suresh Narayanan, chairman and managing director, Nestlé India, said.

The July-September quarter has been positive for packaged goods companies in India, with most firms reporting a rise in sales volumes, showing signs of a revival in consumption demand, especially in rural markets.

The country’s largest packaged goods company Hindustan Unilever Ltd (HUL) reported a 4% increase in volume in July-September, compared with flat growth in the previous quarter. New Delhi-based Dabur India Ltd posted a 7.2% volume growth and Mumbai-based Marico Ltd reported an 8% growth during the July-September quarter.

Nestle India’s shares closed at Rs7,771 per share, down 0.28% on BSE, on a day the benchmark Sensex ended 0.19% up at 33,314.56 points. The results were announced after close of trading.

Nestle India follows a January-December year for accounting.