Nestle India Q1 profit misses as Maggi fiasco continues to hit sales

MUMBAI (Reuters) - Nestle India Ltd reported first-quarter net profit below analysts' estimates as it struggles to regain market share of its once-popular Maggi noodles that were temporarily banned last year over safety concerns.

The India unit of Nestle SA, the world's largest packaged food company, said January-March net profit fell to 2.59 billion rupees ($38.87 million) from 3.20 billion rupees a year earlier. Analysts polled by Thomson Reuters expected a profit of 2.87 billion rupees on average.

Net sales for the quarter slid 8.4 percent, which the company attributed to the Maggi fiasco from last year, when Indian regulators found some samples of Maggi noodles contained unsafe levels of lead.

Nestle India had to pull the noodles off the shelves for nearly six months, and restarted sales only in November, after tests carried out at Indian government-accredited laboratories showed the noodles were safe for consumption.

The public relations crisis also hit sales of Nestle's popular confectionary, milk, and beverage brands, which lost market share to rivals such as Hindustan Unilever Ltd.

In recent months, the company has increased spending on advertising and promotion, launched new variants of its products, and has said it would consider cutting prices.

Maggi noodles now has 50 percent of market share, Nestle India Managing Director Suresh Narayanan said in a statement.

Analysts largely expect the company will be able to fully recover lost market share only by January 2017.

($1 = 66.6250 Indian rupees)

(Reporting by Zeba Siddiqui in Mumbai; Editing by Subhranshu Sahu)