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Nestle: Looking to make up the lost ground... - Views on News from Equitymaster
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Nestle: Looking to make up the lost ground...
Nov 2, 2015

Nestle India declared its results for the quarter ended September 2015. The company's revenues came in lower by a third, while profits declined by about 60% YoY during the quarter. Here is our analysis of the results.

Performance summary

  • Revenues decline by 32% YoY. The decline is mainly on account of the decline in sales of Maggi noodles after the product was taken off the shelves given the controversy surrounding the safety of the product.
  • Operating profits decline by 47% YoY with margins coming in at 16.5% as compared to 21.3% in same period of last year. Gross margins expand to 57% as compared to 54% in the same quarter last year.
  • Net profits decline by 60% YoY during the quarter.
  • During 9mCY15, revenues come in lower by 15% YoY, while operating profits decline by 17% YoY. Net profits fall by 56% YoY.

Standalone financial performance

(Rs m) 3QCY14 3QCY15 Change 9mCY14 9mCY15 Change
Net sales 25,704 17,424 -32.2% 73,239 62,159 -15.1%
Expenditure 20,229 14,544 -28.1% 57,679 49,226 -14.7%
Operating profit (EBDITA) 5,476 2,879 -47.4% 15,560 12,933 -16.9%
EBDITA margin 21.3% 16.5%   21.2% 20.8%  
Depreciation 846 906 7.0% 2,527 2,576 1.9%
EBIT 4,629 1,974 -57.4% 13,033 10,357 -20.5%
EBIT margin 18.0% 11.3%   17.8% 16.7%  
Interest 2 0 -90.0% 142 35 -75.5%
Other income 155 272 75.2% 696 828 19.0%
Employee benefit expenses due to passage of time 162 189 16.5% 491 571 16.2%
Provision for contingencies - -   250 302 20.8%
Corporate social responsibility expense - 16   - 42  
Exceptional items - (245)   - (4,762)  
Profit before tax 4,621 1,795 -61.1% 12,846 5,475 -57.4%
Tax 1,508 553 -63.3% 4,263 1,675 -60.7%
Effective tax rate 33% 31%   33% 31%  
Profit after tax/(loss) 3,113 1,242 -60.1% 8,583 3,801 -55.7%
Net profit margin (%) 12.1% 7.1%   11.7% 6.1%  
No. of shares (m)       96.4 96.4  
Diluted earnings per share (Rs)*         120.8  
Price to earnings ratio (x)         51.5  

(*On a trailing 12-month basis)

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