Nestle India posts higher quarterly profit on strong urban demand

By Ashna Teresa Britto and Praveen Paramasivam

BENGALURU (Reuters) -Nestle India reported a nearly 16% rise in quarterly profit on Wednesday, benefiting from steady urban demand for its packaged foods, including the Nescafe range of coffees and KitKat chocolates.

The Indian arm of Swiss giant Nestle SA said profit before exceptional items and tax climbed to 9.94 billion rupees ($119.8 million) for the fourth quarter ended Dec. 31.

It recorded a one-time charge of 1.07 billion rupees due to changes in its pension plan, according to a regulatory filing.

Nestle India outperformed its large-cap peers as it has a smaller presence in rural areas and faces limited competition in its key coffee, noodles and baby foods businesses, Axis Securities analyst Preeyam Tolia said.

Dove soapmaker Hindustan Unilever, meanwhile, reported a marginal rise in quarterly earnings, while biscuits maker Britannia Industries posted a fall, both on account of subdued rural demand and elevated competition.

Shares of Nestle India, known for its Maggi noodles and Cerelac baby food, rose 2% after the results.

Nestle India, which declared an interim per-share dividend of 7 rupees, reported an 8.1% rise in revenue to 46 billion rupees, helped by a double-digit growth in its beverage business.

Urban consumers with higher disposable incomes spent more on coffee and noodles despite the rising prices of essentials, benefiting packaged foods makers with a large presence in cities, including Nestle India and Yippee noodles maker ITC.

Separately, Nestle India approved a slump sale of its Nestle Business Services division, which helps the packaged foods maker optimise costs and introduce more automation, to its subsidiary Purina PetCare India in a deal worth 798 million rupees.

Nestle SA is due to report results on Feb. 22. ($1 = 82.9620 Indian rupees)

(Reporting by Ashna Teresa Britto in Bengaluru and Praveen Paramasivam in Chennai; Editing by Sonia Cheema and Sohini Goswami)