BENGALURU (Reuters) -Nestle India reported a nearly 9% decline in quarterly profit on Thursday, hurt by higher ingredient prices and weaker demand for its packaged food.
The Indian arm of Swiss food major Nestle reported profit before exceptional items and tax of 10.21 billion rupees ($121.51 million) for the second quarter ended Sept. 30.
Consumer goods makers, such as Nestle, have raised the prices of their chocolates and instant coffee in the last few quarters to counter the surging cost of raw materials. Unfavorable weather conditions in major coffee and cocoa producers such as Brazil, Vietnam and Ivory Coast have curbed supplies. Sky-high prices of these commodities have weighed on the profit margins of packaged food groups globally, including J.M. Smucker in the United States and Swiss chocolatier Barry Callebaut.
Earlier in the day, parent Nestle SA cut its full-year sales outlook amid weaker demand and said it is revamping senior leadership.
For Nestle India, which houses Maggi noodles, KitKat chocolates and Nescafe coffee, quarterly expenses increased 3.4%. Revenue increased at its slowest pace in eight years, rising 1.3% to 51.04 billion rupees.
Higher product prices also weighed on demand. “Some key brands witnessed pressure due to softer consumer demand,” Nestle India said without specifying the products.
The company is the first major packaged food maker in India to report September-quarter results.
Nestle India also said 14 of its 21 variants of Cerelac baby food “will have no refined sugar” and half of them are expected to be available by November-end. Earlier this year, Nestle came under fire when a Swiss investigative organisation reported it adds sugar to its baby foods sold in low-income countries but not in European markets.
Nestle India’s shares were down 3.2% at 1321 IST, taking their year-to-date decline to 10.3%.
($1 = 84.0250 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai; Editing by Eileen Soreng)
