Nestle India Q4 Results: PAT rises over 4% to Rs 656 crore, misses estimates

Nestle India Q4 results:  Nestle India on Wednesday, February 7, reported a net profit of Rs 655.61 crore for the quarter ended December 31, 2023, up 4.38 per cent against Rs 628.06 crore logged in the year-ago period. The company's revenue from operations came in at Rs 4,600.42 crore, up 8.07 per cent against Rs 4,256.79 crore registered in the corresponding quarter of the previous fiscal.

The numbers, especially net income, fell short of analysts' expectations. Zee Business Research had estimated the company to post 10 per cent year-on-year (YoY) growth in consolidated revenue at Rs 4,700 crore. Net profit, or profit after tax (PAT), was expected to surge by 19 per cent YoY to Rs 749 crore.

The company also declared an interim dividend of Rs 7 per share.

The stock eventually ended at Rs 2,499.05, up 1.68 per cent on the BSE.

Commenting on the results, Suresh Narayanan, Chairman and Managing Director, of Nestlé India said, “I am pleased to share that, despite external challenges, we have once again delivered a strong performance this quarter. Domestic sales grew by 8.9 per cent on the back of pricing and mix growth, with strong growth momentum in e-commerce and out-of-home channels. The quarter was marked by an increase in brand investments across all product groups. I am also pleased to note that during the year 2023, our total sales grew by over 13.3% and we crossed the Rs19,000 crore mark."

All key brands and product groups have contributed to Nestlé India’s consistent growth trajectory. This quarter, strong demand for NESCAFÉ CLASSIC and NESCAFÉ SUNRISE propelled the Beverages product group to be our largest contributor to growth. Our beverages business witnessed a double-digit growth and NESCAFÉ gained significant market share. The milk and Nutrition product group posted double-digit growth. Prepared Dishes and Cooking Aids also maintained creditable growth this quarter. Confectionery, one of our strong growth drivers also delivered good growth. The growth across all product groups demonstrates the trust consumers placed in us and the unwavering commitment and dedication of our teams, the Chairman added. 

Commodity Outlook

Nestle said that coffee prices continue to be volatile and are historically high due to limited availability. A healthy milk flush in the winter is expected to keep prices stable. Commodities such as wheat and rice are stable as of now. A rain deficit is expected to impact the production of maize, sugar, oil seeds, and spices, which may impact pricing.

Change of Financial Year

The company said that its board of directors, on July 27, 2023, approved the change of the financial year of the company to a uniform financial year, commencing on April 1 of every year and ending on March 31 of the following year.

"Consequently, as a transitional arrangement, the current financial year of the company will be for a period of 15 months commencing January 1, 2023, and ending March 31, 2024, while the previous financial year was 12 months, from January 1, 2022, to December 31, 2022. The audited results for the previous financial year are also comparable period figures for the twelve months ended December 31, 2023," the company said in its release.

Stock Split Update

Nestle India, in its filing, said that on and from the record date of January 5, 2024, the equity shares of the company have been subdivided, such that 1 (one) equity share having a face value of Rs 10 each, fully paid-up, stands subdivided into 10 equity shares having a face value of Re 1 each, fully paid-up, ranking pari-passu in all respects.

"The earnings per share for the prior periods have been restated considering the face value of Re1 each under Ind AS 33, -"Earnings per share"," it added.

Third Interim Dividend

The Board of Directors has declared a third interim dividend for the financial year 2023–24 of Rs 7 apiece, which amounts to Rs 6,749.1 million, which will be paid on and from March 5, 2024.

This is in addition to the first interim dividend of Rs 27 per equity share and the second interim dividend of Rs 140 per equity share paid on May 8, 2023, and November 16, 2023, respectively.

Slump sale of Nestle Business Services

The Board of Directors have approved the slump sale of the Nestle Business Services ('NBS') division of the company to Purina PetCare India Private Limited, which is a related party, and a 100 per cent subsidiary of Nestle S.A, for an aggregate consideration of nearly Rs 798 million. The transaction shall be effective from July 1, 2024, subject to customary closing conditions. 

The slump sale of the NBS division is outside the scheme of arrangement. The NBS Division notionally represents approximately 0.36 per cent of the annual consolidated turnover of the company for the financial year ending December 31, 2022.

"The NBS Division is well below the company’s 20 per cent net worth as per the audited balance sheet of the preceding financial year. The slump sale of the NBS Division does not qualify as an undertaking as per the provisions of the Companies Act, 2013 and therefore does not require the approval of the shareholders," the release added.