Nestle India Q1 earnings: Net profit declines, stock falls nearly 6%

Nestle India shares slipped nearly 6% after the packaged foods firm reported a 13.4% fall in consolidated net profit for the quarter ended June 30. The company's net profit fell to Rs 646.6 crore from Rs 746.6 crore in the same quarter of the previous year. The fall was attributed to higher raw material and finance costs, impacting earnings despite robust growth across key categories. Revenue from operations saw a 5.9% increase to Rs 5,096.2 crore, but the company's share price dipped 5.59% to Rs 2,315.55 on the BSE following the announcement. Market cap of the firm fell to Rs 2.24 lakh crore.  

The inflation in key commodities such as cocoa and coffee, integral to Nestle's popular KitKat chocolates and Nescafe coffees, contributed significantly to the increased costs. Nestle India's Chairman and Managing Director Suresh Narayanan stated, "The quarter was impacted by elevated consumption prices across the commodity portfolio."

He further noted that higher operational costs were a result of expanded manufacturing efforts over the past several months. The company had to borrow from commercial banks to meet temporary operational cash-flow needs, leading to increased finance costs. However, Narayanan also highlighted a stabilisation in prices for edible oil and cocoa, a declining trend in coffee prices, and a stabilising to modest increase in milk pricing.

Nestle India also experienced strong performance across several categories, including prepared dishes, cooking aids, powdered and liquid beverages, and confectionery, all recording double-digit growth. The company flagged notable success with its NESCAFÉ Classic, NESCAFE Sunrise, and NESCAFE GOLD brands during the quarter.

In a significant leadership change, Nestle's board approved the appointment of Manish Tiwary as the new Chairman and Managing Director, effective 1st August 2025, succeeding Suresh Narayanan, who is set to retire on 31st July 2025. This leadership change aligns with broader industry trends of leadership rejigs amidst investor pressure for improved performance. Additionally, the company remains optimistic about future growth prospects, aiming to leverage its strong brand portfolio and market position.