Nestle India Q4 profit up 65.5% at Rs 628 cr, credits 'robust demand'

In 2022, its rurban footprint grew by 13%, according to its investor presentation

Nestlé India posted a 65.5 per cent increase in net profit to Rs 628.06 crore, while revenue was up 13.6 per cent at Rs 4,256.7 crore.

Domestic sales of the maker of Maggi noodles and KitKat chocolates were up 13.9 per cent at Rs 4,061.8 crore in the quarter. Export sales were up 17.1 per cent to Rs 171.4 crore. “We delivered our highest double-digit growth in a decade (in 2022) led by sustained volume and mix-led growth, leading to a strong value growth,” said Suresh Narayanan, chairman and managing director of Nestlé India, in a press statement. 

“Our robust performance on e-commerce continued was fuelled by quick commerce and click and mortar. Out-of-home (OOH) business made a strong comeback in 2022, recovering its pre-Covid base and delivering robust growth by revamping, resetting geography, channel and sales priority,” he said.

The company’s e-commerce contribution to its sales went up to 6.5 per cent in 2022 from 5.3 per cent in 2021, according to its investor presentation. 

The company strengthened its ‘rurban’ (rural + urban) approach by going deeper into smaller towns.

“The rurban journey of the company is strong, continues to be strong is invested in dedicated resources and is an area of increased opportunity and growth for the company," Narayanan said. 

In 2022, its rurban footprint grew by 13 per cent, according to its investor presentation. In 2021, rurban footprint grew 15 per cent. 

Category performance

The company saw strong growth in prepared dishes and cooking aids segment. Pricing and volume helped sales of Maggi Noodles and Maggi Masala-ae-Magic, while Milkmaid and ready-to-drink offering registered strong growth, but milk products continued to face challenges due to price rise.

In confectionery, Nestlé India gained market share and delivered robust growth driven by Kitkat and Munch. Nescafé Classic, Nescafé Sunrise, Nescafé Gold delivered broad-based double-digit growth. It also recorded the highest-ever single-year growth in household penetration, and also closed the year with a highest-ever market share.

In its commodity outlook for the short-to-medium term, Nestlé India expects key categories such as cereals, grains and coffee to continue to be at 10-year high. Edible oil too was at a 10-year high and moderated towards the last quarter. Fresh milk prices continue to remain firm due to lumpy skin disease in the second half of 2022 and rise in feed costs to farmers, it said.

“With some respite in crude oil, input materials such as packaging have witnessed relief. Demand continues to be robust with domestic outlook of prices evolving because of supply and weather conditions,” said the company in the statement.

On the company’s expansion plans, Nestlé India’s chief financial officer, David Steven McDaniel said during the call that the next two years will see the company’s capex spends peaking. These investments are primarily for food and chocolate. “We know we spent Rs 500 crore in 2022. We said the next two years we will double and then grow further in 2024. So the large amount of capex is coming in the next two years.”

He added that the plan was to add Rs 1,300 crore and Rs 2,000 crore of capex in 2023 and 2024, respectively.

On its royalty, which comes for renewal in 2024, Narayanan said the 2,000 brands of Nestlé are owned by the company itself. “The logic has remained the same between the last royalty agreement that we had negotiated and agreed upon with shareholders,” he said.