By Mridula Kumar and Praveen Paramasivam
July 22 (Reuters) – Nestle India posted a 48% surge in first-quarter profit on Wednesday, with all of its product groups clocking double-digit growth on strong demand for Maggi noodles, KitKat chocolates and Nescafe coffee brands, sending its shares as much as 4% higher.
The consumer goods industry bellwether kicks off earnings for the sector, which analysts expect to benefit from improving rural consumption, stronger demand for premium brands and an extended summer boosting sales of seasonal goods.
“All four product groups delivered strong double-digit growth,” Chairman and Managing Director Manish Tiwary said in a statement, referring to prepared dishes, milk products, chocolates and beverages.
The Indian arm of Swiss food major Nestle said its profit stood at 9.75 billion rupees ($101.1 million) for the first quarter ended June 30.
Total revenue rose 25% to 63.78 billion rupees, helped by strong sales on online platforms and wider distribution.
Peers including Godrej Consumer and Dabur India have pointed to better demand alongside Middle East war-triggered cost pressures, which they are countering with price increases, pack-size reductions and cost-saving measures.
“During the quarter, we further accelerated operational cost savings,” Tiwary said, without providing further details.
Heading into the earnings season, analysts projected margin pain for the sector.
“Pre-quarter updates of most companies indicate better cost management in the backdrop of volatile crude prices and hence would be delivering better margins than anticipated,” ICICI Securities analyst Kaustubh Pawaskar said.
But risks, including the impact of the Middle East war on cost inflation, remain.
Looking ahead, Nestle India flagged inflation in edible oil, cocoa and sugar, with sugar posing further risk if uneven monsoon conditions linked to El Niño, a periodic warming of the Pacific Ocean that can raise global temperatures and trigger extreme weather, hurt production.
($1 = 96.4300 Indian rupees)
(Reporting by Mridula Kumar in Bengaluru and Praveen Paramasivam in Chennai; Editing by Rashmi Aich and Mrigank Dhaniwala)
