Why Did Nestle India's Q1 Net Profit Drop by 13.4%?
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Synopsis
Nestle India's latest financial report reveals a significant drop in net profit. What factors contributed to this decline, and how did the company manage to achieve revenue growth amidst challenging conditions? Discover the insights behind these numbers and what they mean for the future of the brand.
Key Takeaways
- Net Profit Decline: 13.4% drop in Q1 FY26.
- Revenue Growth: 6% increase in revenue from operations.
- Domestic Sales: Grew by 5.5% to Rs 4,860 crore.
- Export Sales: Increased 16% YoY to Rs 214 crore.
- Product Innovation: Focus on beverages like Nescafe drives growth.
Mumbai, July 24 (NationPress) The prominent FMCG company Nestle India reported a 13.4% year-on-year (YoY) decrease in its consolidated net profit, which decreased to Rs 646.5 crore during the first quarter of the current financial year (Q1 FY26), compared to Rs 746.6 crore in the same quarter last year (Q1 FY25).
Despite this profit decline, the FMCG leader achieved a 6% YoY increase in revenue from operations, as per its recent stock exchange disclosure.
The revenue climbed to Rs 5,096 crore in the April-June 2025 quarter, up from Rs 4,814 crore during the same period last year.
This revenue growth was primarily driven by a 5.5% increase in domestic sales, which rose to Rs 4,860 crore from Rs 4,608 crore.
Export sales also showed a positive trend, increasing 16% YoY to Rs 214 crore from Rs 184.5 crore, according to the filing.
The company’s total income for Q1 amounted to Rs 5,100 crore, reflecting a 5% increase from Rs 4,853 crore in the corresponding period last year.
Product sales reached Rs 5,074 crore, up from Rs 4,793 crore in the same quarter the previous year.
Other operating revenue saw a slight rise to Rs 22 crore, compared to Rs 21 crore in the prior year.
Suresh Narayanan, Chairman and Managing Director of Nestle India, stated that the quarter was impacted by rising commodity prices and higher operational costs due to recent manufacturing expansions.
He also noted that bank borrowing for short-term operational needs resulted in increased finance costs.
However, he indicated that prices of edible oil and cocoa have begun to stabilise, coffee prices are declining, and milk prices are experiencing a modest rise.
Narayanan emphasized that the Powdered and Liquid Beverages segment remained a key growth driver for the company, showcasing strong double-digit growth.
"Nescafe continued to dominate the coffee market, gaining additional market share. The brand concentrated on both affordable coffee packs and premium products like Nescafe Gold and Nescafe Roastery," he added.
Point of View
Nestle India's financial results reflect broader economic challenges facing the FMCG sector. The decline in net profit raises concerns, but the growth in revenue indicates resilience and adaptability. As the company navigates through fluctuating commodity prices and operational hurdles, its strategic focus on product innovation will be crucial in sustaining long-term growth.
NationPress
26/07/2025
Frequently Asked Questions
What caused Nestle India's profit decline?
The decline in profit was attributed to high commodity prices and increased operational costs associated with recent manufacturing expansions.
How much did Nestle India's revenue grow?
Nestle India reported a 6% year-on-year growth in revenue, reaching Rs 5,096 crore in Q1 FY26.
What are the key drivers of revenue growth?
The revenue growth was primarily driven by a 5.5% increase in domestic sales and a notable rise in export sales.
What product categories are performing well for Nestle?
The Powdered and Liquid Beverages category has been a significant growth driver, with Nescafe leading the coffee market.
How has Nestle addressed rising operational costs?
The company is focusing on product innovation and cost management strategies to mitigate the impact of rising operational costs.
