Nestle Q3 profits plunge on account of Maggi disruption

Nestle India, the makers of the Maggi noodles, has posted a net profit of Rs 124.2 crore for the third quarter ended September 30, 2015, compared with a profit of Rs 311.29 crore in the same period, previous fiscal.

The company is faced with an unusual situation and continued to deal with it during the quarter as well. The financial results for the quarter are therefore, not comparable to previous periods, Nestle India said.

According to the company, the Maggi issue disrupted business. In addition to loss of sales from the business disruption, net sales worth Rs 15.32 crore (cumulative — Rs 303.7 crore) have been reversed during the quarter, in relation to Maggi noodles stock being withdrawn from trade partners and market. The exceptional item relates to estimates of loss on account of stocks withdrawn, including incidental costs thereto and other related costs incurred exclusively in the ordinary course of the company’s business, and are dealt with in line with appropriate Accounting Standards.

During the quarter, exceptional items for the company stood at Rs 24.52 crore and in the sequential quarter it stood at Rs 451.66 crore.

Net sales for Nestle India during the quarter decreased 32.1 per cent to Rs 1,736.2 crore compared with Rs 2,557.8 crore in the comparable quarter, largely due to the impact of the Maggi noodles issue.

Net domestic sales decreased by 33.8 per cent while export sales decreased by 6.4 per cent, which was impacted by Maggi noodles issue and lower sales to Nepal due to blockage of border in the last week of September, 2015, Nestle India said.

Meanwhile, the board of directors of Nestle India, at its meeting held on October 29, 2015, have appointed Suresh Narayanan as the chairman in addition to his responsibility as the managing director. Suresh Narayanan has extensive and senior management experience, both in India as well as international markets.

He was chairman and chief executive officer of Nestle Philippines before taking charge as the managing director of the Company effective August 1, 2015. Antonio Helio Waszyk had retired as the chairman of the company, effective October 1, 2015.