Nestle India, which owns instant noodles brand Maggi, on Tuesday reported a 11.15 per cent year-on-year growth in its net profit at Rs 486.6 crore for the second quarter ended June 30 of calendar year 2020, despite supply chain disruption caused by coronavirus-led nationwide lockdown. The company said that its profit after tax and earnings per share have been positively impacted by the lower tax rates.
The domestic arm of Swiss FMCG major had posted a net profit of Rs 437.8 crore in the same quarter last year.
The company, which has a presence in milk & nutrition, beverages, prepared dishes & cooking aids & chocolate, reported sales growth of 2 per cent at Rs 3,041.5 crore as against Rs 2,982.8 crore in the year ago period. Domestic sales increased by 2.6 per cent, while export declined by 9.3 per cent during the quarter under review.
The company said it delivered strong performance in the 'e-commerce' channel which grew by 122 per cent during April-June quarter and now contributes 3.6 per cent to domestic sales.
Commenting on the results and the prevailing environment, Suresh Narayanan, Chairman and Managing Director, 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."
He said that sales were adversely impacted due to the COVID-19 induced lockdown which led to production disruption across factories. Demand in "Out Of Home channel" was severely reduced, while "in home consumption" sales were boosted by EVERYDAY Dairy Whitener, Nestle a+Milk, other milk based portfolio, NESCAFE Classic and NESCAFE Sunrise, all of which performed well during the June quarter. Maggi also witnessed solid growth towards the end of the quarter after initial supply constraints.
"Overall, 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," Narayanan said.
"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 is a tribute to all our employees, partners & stakeholders who are imbued in the Nestle culture of respect and quiet but determined dedication. While we progress each day, challenges in sales and distribution due to precautionary and well-intended measures taken by the authorities do cause disruptions," he added.
Ahead of Q1 earnings announcement, shares of Nestle India ended day's trade at Rs 17,098.95, down 1.41 per cent, against previous closing price of Rs 17,343.90 on the Bombay Stock Exchange.