Nestle India Q4 profit dips 20% to Rs 386.66 crore, revenue up 8.9%

New Delhi: FMCG major Nestle India Ltd on Thursday reported a 20 per cent decline in its net profit to Rs 386.66 crore for the fourth quarter ended on December 31, 2021, on account of a one-time exceptional item on change of pension scheme for its employees.

The company, which follows a January-December financial year, had posted a profit of Rs 483.31 crore in the same period a year ago, Nestle India said in a regulatory filing.

However, its revenue from operations was up 8.93 per cent to Rs 3,739.32 crore during the period under review, as against Rs 3,432.58 crore in the corresponding period last fiscal, the company said.

Nestle India's total expenses in the October-December quarter, were up 8.23 per cent to Rs 3,022.97 crore, as against Rs 2,793.01 crore of the corresponding period.

Nestle India's domestic sales were up 9.17 per cent to Rs 3,559.78 crore, as against Rs 3,260.70 crore in the October-December period of 2020.

Its exports were down 6.63 per cent to Rs 146.42 crore, as against Rs 156.82 crore of the corresponding quarter.

"Domestic Sales growth is largely driven by volume & mix and is broad-based," said 
Nestle in an earnings statement adding exports were lower mainly due to lower coffee exports and change in product mix.

The company had incurred an exceptional item cost of Rs 236.5 crore as it moved from defined benefit pension scheme for certain category of employees to a ‘Future Ready Plan', which is a combination of amended defined benefit pension scheme for past period of service and a defined contribution scheme for future service, with effect from December 2021.

"The frozen amount as determined under the ?Future Ready Plan' has been invested by the Company in an appropriate investment product of an Insurance company. The accumulated investment balance shall be in future utilized to purchase pension annuities from the Insurance company for the employees as per the `Future Ready Plan'," said Nestle India.

Also, under the ’Future Ready Plan', liability towards a certain category of pensioners has been transferred to an Insurance company and future annuities will be paid by the insurance company, it added.

Nestle profit before exceptional item and tax was 10.96 per cent higher in October-December 2021 to Rs 743.68 crore. It was Rs 670.17 crore in the corresponding quarter of 2020.

"Our operating margin have improved from 20 per cent to 21.7 per cent and the net profit before exceptional items moving from 14.1 per cent to 15.2 per cent. However, the reported growth is -20 per cent, which is because of one time exceptional item," said Nestle India Chairman and Managing Director Suresh Narayanan in an earning call with the investors.

For the year 2021, Nestle India's net profit was up 3 per cent to Rs 2,144.86 crore, as against Rs 2,082.43 crore a year ago.

Its revenue from operations increased to Rs 14,709.41 crore in 2021, from Rs 13,350.03 crore in 2020.

Commenting on the annual performance, Narayanan said: "2021 was a very challenging year."

Nestle India witnessed "broad-based, double-digit, volume and mix led growth" despite a highly volatile economic environment, he added.

Like other FMCG makers, Nestle India also faced inflationary headwinds on raw material inputs in 2021.

"We continue to witness high inflation in our key raw and packaging materials, where many are at 10-year highs. However, we remain confident of our ability and competencies and will continue to make all efforts towards cost optimisation and seeking systematic efficiencies to mitigate the impact," it said.

In 2021, Nestle witnessed a continuance of strong growth momentum for its Maggi Noodles and its other power brands such as KITKAT and MUNCH registered "stellar growth" throughout the year.

Instant coffee "NESCAF" Classic continued to deliver double-digit growth," added Narayanan.

E-commerce as a channel showed "strong acceleration" in 2021, on the back of convenience and pandemic-driven consumer behaviour, and was fully leveraged by Nestle India through meaningful shopper insights and data analytics, it added.

During the year, Nestle witnessed a "resurgence" and good revenue growth in organised trade despite the second wave, while OOH (Out of Home) channel was impacted,

While sharing a "short to medium-term" outlook on commodities, Nestle India, in its earnings statement said prices for key categories like edible oils, coffee, wheat, fuel "remains firm to bullish" while costs of packaging materials continue to increase amid supply constraints, rising fuel and transportation costs.

"Input prices are expected to be on bullish trend both globally and to some extent locally. Fresh milk prices are expected to remain firm with continued increase in demand and rise in feed costs to farmers," said Nestle India. "In an environment of raw and packaging material inflation, we continue to keenly look for opportunities for cost optimization and efficiencies".

Meanwhile, in a separate filing, Nestle India said its board in a meeting held on Thursday recommended a final dividend of Rs 65 per equity share of Rs 10 each for the year 2021 amounting to Rs 626.7 crore.

The total dividend for 2021 aggregates to Rs 200 per equity share which includes the first interim dividend of Rs 25 per equity share paid on May 19, 2021 and a second interim dividend of Rs 110 per equity share paid on November 16, 2021. Also Read: Multilateral agencies should provide more funds to deal with future pandemic situations: FM Sitharaman

Shares of Nestle India Ltd settled at Rs 18,090 on BSE, down 0.85 per cent from its previous close. Also Read: OnePlus Nord CE 2 5G launched in India: Price, specs, features - In Pics

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