Nestle's India unit says seeing early signs of easing costs

BENGALURU (Reuters) -Consumer goods conglomerate Nestle India Ltd said it was seeing early signs of softening of prices in commodities such as edible oil and packaging materials, against the backdrop of surging inflation.

Nestle, which sells the popular Maggi instant noodles, KitKat chocolates and Nescafe coffee in the country, said on Thursday profit for the quarter ended June 30 slipped 4.3% to 5.15 billion rupees, hurt by expenses, which rose 21%.

Last week, Unilever's India unit warned that its margins would remain under pressure in the September quarter and growth would be driven by price hikes.

India's consumer goods makers have been contending with stubborn inflation that has impacted everything from fuel to food costs.

Annual inflation rate in June came in above 7%, beyond the central bank's tolerance band for the sixth month in a row.

Nestle India's revenue for the quarter rose 16.1% to 40.37 billion rupees ($506.24 million), it said in an exchange filing, adding that growth was primarily being driven by pricing.

The company did not say how much it has hiked rates in the past quarter.

Analysts at Prabhudas Lilladher said they expect margin pressures to ease by September quarter as prices of palm oil and packaging materials soften.

Nestle India said prices of fresh milk, fuels, grains and green coffee costs were likely to remain firm with sustained increase in demand and volatility.

The company's shares were up 2.3% at 18,990 rupees.

($1 = 79.7450 Indian rupees)

(Reporting by Nandan Mandayam in BengaluruEditing by Dhanya Ann Thoppil)