The Hindu Business Line : Nestle India Q1 net up 13.5%

Nestle India has reported a 13.5 per cent increase in net profit at Rs 88.61 crore for the first quarter ended March 31 as compared to Rs 78.05 crore in the corresponding period last year.

The company's net sales for the quarter increased by 10.2 per cent to Rs 675.92 crore (Rs 613.53 crore). Net domestic sales rose 13.9 per cent to Rs 625.16 crore, largely on account of higher volume growth supplemented by better realisations, a company release pointed out.

However, the company reported a 21.7-per-cent fall in export sales to Rs 50.76 crore (Rs 64.83 crore) "mainly due to lower sales of beverages to Russia and Japan".

Margins under pressure

EBITDA (earnings before interest, tax, depreciation and other income) as a percentage of net sales for the quarter decreased from 22.6 per cent in 2005 to 20.2 per cent in 2006. The company attributed the decline in margins to steep increase in prices of commodities, especially milk solids and green coffee, as well as those of fuels. Margins were also under pressure during the period due to higher operating costs associated with upgraded formulations and manufacturing processes of infant nutrition products. Staggered increases in selling prices and higher volumes have partially offset the cost increases, the company added.

The board of directors had declared on April 15, an interim dividend for the year of Rs 6 per equity share, amounting to Rs 57.85 crore, which it said would be paid on and from May 9, along with the final dividend for 2005 of Rs 2 per equity share.

Mr Martial Rolland, Chairman and Managing Director of Nestle India said: "Our performance in the first quarter of the year has been satisfactory. We are well placed to benefit from the sustained economic expansion in India by leveraging our privileged access to the Nestle group's continuous research on food for various consumer segments, expertise in science based nutrition."