Nestle India Q2 Results: Profit Marginally Down Amid Soft Consumer Demand And High Commodity Prices

Nestle India Q2 Results: The company's net profit stood at Rs 899.49 crore for the quarter ended September 2024, down 0.94 per cent from Rs 908.08 crore in the same period last year

Nestle India Q2 Results: FMCG giant Nestle India Ltd reported a marginal decline in net profit for the second quarter (Q2) of 2024, citing softer consumer demand and rising commodity prices. The company's net profit stood at Rs 899.49 crore for the quarter ended September 2024, down 0.94 per cent from Rs 908.08 crore in the same period last year, according to a regulatory filing.

Despite the dip in profit, Nestle India's revenue from product sales saw a slight increase of 1.3 per cent, reaching Rs 5,074.76 crore, up from Rs 5,009.52 crore in the previous year’s corresponding quarter.

Commenting on the performance, Nestle India’s Chairman and Managing Director Suresh Narayanan acknowledged the challenging environment but remained optimistic. "Despite a challenging external environment with muted consumer demand and high commodity prices, especially for coffee and cocoa, we remained resilient in our pursuit to deliver growth," Narayanan said. He noted that five of the company’s top 12 brands achieved double-digit growth, though some key brands faced pressure due to softer demand.

Domestic Sales and Growth Channels

Nestle India’s domestic sales grew 1.23 per cent to Rs 4,883.14 crore, compared to Rs 4,823.72 crore during the same period last year. The company attributed this growth to the organised trade sector, which includes retail chains and hypermarkets. Categories like noodles, beverages, and premium products contributed to the sales boost.

In the Out of Home (OOH) segment, Nestle India reported robust growth, driven by portfolio transformation, premiumisation, and expanding reach beyond metro areas. Narayanan added, "Our Out-of-Home business continues to be one of our fastest-growing segments with strong double-digit growth."

E-commerce emerged as a key driver, with Nestle India reporting nearly 38 per cent growth in the sector, propelled by popular brands such as KitKat, Nescafe, Maggi, and Milkmaid. E-commerce now contributes 8.3 per cent of the company's domestic sales. The company attributed the growth to quick commerce, new user acquisition, and festive participation.

Nestle’s pet care division, led by Purina, also posted strong growth, particularly in the e-commerce space. Brands like Felix, Friskies, and Pro Plan saw strong demand among pet owners.

Exports and Marketing Investments

Nestle India’s export revenue grew 3.13 per cent to Rs 191.62 crore in Q2, with the company expanding its footprint by introducing new SKUs to markets including Canada, the Middle East, Maldives, and Papua New Guinea. The company also saw a boost in its overall revenue from operations, which rose 1.33 per cent to Rs 5,104 crore. However, total income remained flat at Rs 5,110.86 crore due to a decline in other income sources.

Nestle increased its marketing and advertising spend during the quarter, focusing on core brands and improving digital capabilities. The company said efficiencies in media buying and strengthening brand equity to enhance its presence in the competitive market.

Expenses and Outlook

Total expenses for the quarter rose 3.42 per cent to Rs 4,090.09 crore. Despite the challenges, Narayanan expressed confidence in Nestle India's long-term growth strategy, highlighting the company’s focus on premiumisation and expanding market reach.