Nestle India Q1 profit misses estimates as Maggi fiasco continues to affect sales
The India unit of Nestle SA, the world's largest packaged food company, said January-March net profit fell to Rs 2.59 billion ($38.87 million) from Rs 3.20 billion a year earlier. Analysts polled by Thomson Reuters expected a profit of Rs 2.87 billion on average.
- May 13, 2016,
- Updated May 13, 2016 12:04 PM IST
Nestle India reported first-quarter net profit below analysts' estimates as it struggles to regain market share of its once-popular Maggi noodles that were temporarily banned last year over safety concerns.
The India unit of Nestle SA, the world's largest packaged food company, said January-March net profit fell to Rs 2.59 billion ($38.87 million) from Rs 3.20 billion a year earlier. Analysts polled by Thomson Reuters expected a profit of Rs 2.87 billion on average.
Net sales for the quarter slid 8.4 per cent, which the company attributed to the Maggi fiasco from last year, when Indian regulators found some samples of Maggi noodles contained unsafe levels of lead.
Nestle India had to pull the noodles off the shelves for nearly six months, and restarted sales only in November, after tests carried out at government-accredited laboratories showed the noodles were safe for consumption.
The public relations crisis also hit sales of Nestle's popular confectionary, milk, and beverage brands, which lost market share to rivals such as Hindustan Unilever Ltd.
In recent months, the company has increased spending on advertising and promotion, launched new variants of its products, and has said it would consider cutting prices.
Maggi noodles now has 50 percent of market share, Nestle India Managing Director Suresh Narayanan said in a statement.
Analysts largely expect the company will be able to fully recover lost market share only by January 2017.
Nestle India reported first-quarter net profit below analysts' estimates as it struggles to regain market share of its once-popular Maggi noodles that were temporarily banned last year over safety concerns.
The India unit of Nestle SA, the world's largest packaged food company, said January-March net profit fell to Rs 2.59 billion ($38.87 million) from Rs 3.20 billion a year earlier. Analysts polled by Thomson Reuters expected a profit of Rs 2.87 billion on average.
Net sales for the quarter slid 8.4 per cent, which the company attributed to the Maggi fiasco from last year, when Indian regulators found some samples of Maggi noodles contained unsafe levels of lead.
Nestle India had to pull the noodles off the shelves for nearly six months, and restarted sales only in November, after tests carried out at government-accredited laboratories showed the noodles were safe for consumption.
The public relations crisis also hit sales of Nestle's popular confectionary, milk, and beverage brands, which lost market share to rivals such as Hindustan Unilever Ltd.
In recent months, the company has increased spending on advertising and promotion, launched new variants of its products, and has said it would consider cutting prices.
Maggi noodles now has 50 percent of market share, Nestle India Managing Director Suresh Narayanan said in a statement.
Analysts largely expect the company will be able to fully recover lost market share only by January 2017.