Nestle India marks business growth despite demonetisation

Swiss FMCG company Nestle has said its Indian business reported a strong growth in 2016 despite some disruptive impact of demonetisation with Maggi continuing to regain market share. The company, which had suffered a setback in 2015 after its popular product Maggi noodles was banned, said it has regained the market share in the segment following a re-launch after five months.

“Our business in India grew strongly despite some disruptive impact from demonetisation at the end of the year,” Nestle said in a statement. Maggi noodles continued to regain market share, the company said, adding that confectionery also did well with KitKat.

During 2016, Nestle’s global sales increased by 0.8 per cent to US$ 89.42. “Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations. We saw a solid trading operating profit margin improvement and our cash flow grew significantly,” said Mark Schneider, CEO, Nestle.

In Asia, Oceania and sub-Saharan Africa (AOA) zone, which includes China, India and Indonesia, among others, had a sales figure of US$ 14.49 billion, up 3.2 per cent from 2015. “The zone saw real internal growth and organic growth gain increasing momentum throughout the year, with market shares recovering and almost all markets contributing,” the company said.

However, it also added, “The effect of an increase in restructuring spend was more than offset by lower one-off costs related to Maggi in India.” In the AOA zone, Maggi also registered a double digit growth in Central and West Africa markets.

“There was double-digit growth in Central and West Africa (including Ghana, Côte d’Ivoire and Nigeria) and in Equatorial Africa (including Angola), with Maggi and Nido doing well,” it said. However, in China, Nestle witnessed a double-digit decline as Yinlu affected overall growth.

“Several initiatives to turn around the business are in place and stabilisation is expected in 2017. Dairy (excluding Yinlu) and confectionery grew positively and Nescafe performed well,” the FMCG heavyweight said. South East Asia was strong with double-digit growth in Vietnam and Indonesia. Philippines also performed well with high single-digit growth.

“There was also strong growth in Pakistan from dairy, ready-to-drink and other categories,” it added. Nestle India had reported a decline of 8.66 per cent in net profit to INR 167.31 crore for the fourth quarter ended December 2016. However, net sales of the company was up 16.17 per cent to INR 2,261.28 crore.