InvestorQ : How did you see the Nestle results for the Dec-20 quarter? Was it below the expectations of the market?
Mary Joseph made post

How did you see the Nestle results for the Dec-20 quarter? Was it below the expectations of the market?

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Arusha Ray answered.
3 months ago
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One of India’s most profitable FMCG food companies, Nestle India, reported a marginal rise in net profit for Dec-20 quarter at Rs.483 crore. That is literally flat on a yoy basis. In short, both the top line and bottom line were below street expectations. This is despite the fact that the sales revenues surged 9.2% to Rs.3,418 crore.

The surge in the top line by 9.2% for the quarter came on the back of very strong off-take in the domestic market, where there has been a sharp rise in pent-up demand after the COVID lockdowns. Domestic business contributes 90% towards top line and that grew by 10.1% while exports contracted -7.7% in the Dec-20 quarter.

The domestic market for the products of Nestle India got a big boost from the rapid rise in in-home consumption of ready-to-cook and ready-to-eat products. This was an outcome of more people forced to stay indoors due to the pandemic. For Nestle, the good news was that nearly two-thirds of its product portfolio showed double digits growth due to higher pent-up demand.

Nestle is the undisputed market leader in the Indian FMCG market in a number of critical products that includes instant noodles, dairy whiteners, wafers and confectioneries catering to the premium end of the market. According to the Nestle management, the growth was an outcome of volumes and mix. Apart from higher sales volumes, the company consciously tweaked its product in favour of the higher margin volumes.

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