- 22 Apr 2022
- ICICIdirect Research
Nestle reports Q4 resultsNESTLEIND - 22149 Change: -218.85 (-0.98 %)
News: Nestle witnessed growth of 10.2% to Rs 3980.7 crore (I-direct estimate : Rs 3987.8 crore) led by pricing growth in milk products, coffee & Maggi noodles. The growth was also aided by volume growth in Maggi noodles & double digit value growth In chocolates & coffee. With the sharp commodity inflation in milk, edible oil, coffee and wheat, gross margins have contracted 313 bps. The company was able to save 23 bps and 70 bps (as percentage of sales) in Employee & overhead spends, respectively. Operating profit was flat at Rs 924.7 crore (I-direct estimate : Rs 984 crore) and operating margins contracted 254 bps to 23.2%. Net profit was down 1.3% to Rs 594.7 crore (I-direct estimate: Rs 629.4 crore).
Views: Nestlé India continues to witness strong growth in Maggi noodles after commissioning of the Sanand factory. Further, larger part of the growth has been contributed by price growth in Maggi noodles, coffee and milk products. Most FMCG companies have been facing high commodity inflation in the last six to eight months. Though FMCG companies are taking aggressive price hikes, the hikes are only partially passing on commodity inflation. Inflation has also adversely impacted demand in semi-urban & rural regions. Though we believe commodity inflation would cool down in the longer run, the next few quarters would continue to remain challenging for FMCG companies from both volume growth and margin perspective.