A period when the Covid-19 lockdown disrupted everything from sourcing and production to supply, Nestle India Ltd.’s revenue rose considerably even as lower tax aided profit in the quarter ended June.
With a year-on-year growth to Rs 3,050, the maker of Kit Kat chocolate and the Maggi instant noodles saw its revenue rise by 1.7 percent in the April-June period, according to an exchange firm. Also, analysts estimated that the compilation by BloomQuint had fastened the top line at INR Rs 3,205 crore.
In a statement accompanying the results, Suresh Narayanan, chairman and managing director at Nestle India said, “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.”
Following the January-December fiscal, the net profit of Nestle India rose to 11.2 percent over the year ago to reach INR 487 crore in the three months which ended this June. While the forecast was expected to be somewhere about INR 525 crore. The net profit after tax and earnings per share have been positively impacted by the lower tax rates.
The statement also says that the tax expense for the quarter has been calculated at the rates introduced under the Taxation Laws (Amendment) Ordinance 2019, dated Sept. 20, 2019. There has been a positive impact due to the lower tax rates on the net profit after and earnings per share.
Furthermore, Nestle’s operating profit also rose to INR 747 crore at 4.9 percent year-on-year. While its margins also saw a stretch from 23.7 percent to 24.5 percent a year ago, which would be in line with the 24.6 percent forecast.
Talking a little about the company’s success. Narayanan said, "We accelerated our digital engagements across key parts of our portfolio, put out innovative campaigns to engage the consumers in many, while ensuring judicious application of marketing spends in line with the current business scenario. The e-commerce channel grew 122% this quarter, and now contributes 3.6% to domestic sales."
The consumption of other categories also rose, and similarly, the company has launched new varieties of Maggi noodles as well. Even while the demand for out of home consumption declined due to lockdown, in-home consumption saw a significant growth during the same phase. Hence, witnessing some constraints in the initial supply, the company rose back and witnessed a significant growth at a steady pace.
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