BENGALURU/CHENNAI (Reuters) – Nestle India reported a bigger-than-expected increase in its quarterly profit on Thursday, as it benefited from higher product prices and demand for its packaged food items including Maggi instant noodles and KitKat chocolates.
Consumer goods makers have seen steady demand for certain food items such as chocolates and biscuits, especially in urban areas, while they have also raised prices on some products including coffee and noodles to protect their bottomline.
The Indian arm of the Swiss food giant Nestle reported a nearly 27% increase in net profit to 9.34 billion rupees ($112.03 million) for the three months ended March 31, beating LSEG estimates of 8.71 billion rupees.
Separately, Nestle India also said it would form a joint venture with drugmaker Dr. Reddy’s Laboratories to make products such as supplements and nutraceuticals – often described as food and drinks with potential health benefits.
Dr. Reddy’s would own 51% of the JV, with the chocolate maker owning the rest.
In the March quarter, revenue from operations for Nestle India, which is launching Nespresso coffees and machines in the country by the end of the year, climbed 9% to 52.68 billion rupees.
Looking ahead, Nestle India said commodity prices, including that of coffee and cocoa, are soaring, with milk prices expected to add to its problems by increasing during the harsh summer months in the country.
Shares in Nestle India rose 1.9% as of 01:06 p.m. IST (07:36 GMT). Including the session’s moves, the stock is down about 4% this year.
Earlier in the day, parent Nestle SA missed first-quarter organic sales growth estimates as it raised prices and sold fewer products.
($1 = 83.3675 Indian rupees)
(Reporting by Navamya Ganesh Acharya in Bengaluru and Praveen Paramasivam in Chennai; Editing by Rashmi Aich)
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