Nestlé India Q1 profit falls 12% on higher input, finance costs

Mint

24-07-2025

New Delhi: Nestlé India Ltd's profit fell in the June quarter because of input cost pressure and higher finance costs for the maker of Maggi noodles and KitKat chocolate.
The packaged food company's profit after tax dropped 11.7% year-on-year to ₹ 659.2 crore in the first quarter of FY26, according to its exchange disclosures on Thursday.
Total sales grew 5.8% year-on-year to ₹ 5,074 crore during the quarter. The company's expenses increased 9.25%, driven by higher finance and interest costs on employee benefits.
"The quarter was impacted by elevated consumption prices across the commodity portfolio. In addition, we witnessed higher operations costs as a result of significant expansion in manufacturing in the last seven to eight months,' said Suresh Narayanan, chairman and managing director, Nestlé India. 'Moreover, borrowing from commercial banks to fund temporary operational cash-flow requirements resulted in higher finance costs in the quarter.'
However, Narayanan said, 'We have noticed stabilizing prices for edible oil and cocoa, a declining trend in coffee and stabilizing to modest increase in pricing of milk.'
Ebitda at ₹ 1,101.0 crore was flat year-on-year and 6% below estimates of ₹ 1,173 crore, driven by gross margin compression and higher operating expenses. Ebitda is earnings before interest, tax, depreciation and amortization, a measure of operational profitability.
The company delivered balanced growth in three out of its four product group categories. Nestlé, which sells coffee, noodles, chocolates, packaged milk, yogurt, and pet food, experienced high input costs over the past few quarters as prices of coffee and cocoa remained elevated.
However, coffee prices are expected to remain range-bound at current lower levels, as the upcoming Vietnam crop appears to be normal, the company said. Cocoa and edible oil prices have stabilized and remain range-bound. Milk prices are anticipated to decrease with the onset of a favourable monsoon and flush season, the company said.
Analysts said Nestlé's volume growth was 'modest' and the company missed margin expectations due to input cost pressure.
'Nestlé's top-line momentum remains muted for the fifth consecutive quarter, impacted by a broader urban demand slowdown,' brokerage Equirus Research said in a note. 'While key categories such as beverages, confectionery, and prepared dishes saw healthy traction, overall growth was weighed down by continued weakness in the nutrition portfolio. Commodity cost trends warrant close monitoring, as margin recovery may remain constrained in the near term.'
Shares of Nestlé closed 5.41% lower at ₹ 2,320.15 apiece on the BSE on Thursday compared with a 0.66% decline in the benchmark Sensex.
The prepared dishes and cooking aids category swung back to volume growth, recording double-digit rise for Maggi noodles, said Narayanan. The confectionery category saw high double-digit growth, driven by underlying volume growth.
The milk products and nutrition category reported a mixed performance, with certain segments showing growth while a few recording a muted performance.
E-commerce maintained its growth momentum, contributing 12.5% of domestic sales, driven by quick commerce and new launches.