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Nestlé India Ltd. reported a 60% drop in its net profit for the July to September period as its sales fell sharply after a scare over the safety of its Maggi instant noodles. The Indian arm of Nestlé SA said its profit slipped to 1.24 billion rupees ($19 million) in the last quarter, compared with 3.11 billion rupees a year earlier. Its revenue declined 32% to 17.36 billion rupees. “The Maggi issue disrupted business,” the company said in a release to BSE, a Mumbai-based stock exchange. Export sales also decreased by 6.4% on the scare and lower sales to Nepal due to the blockage of the country’s border with India in the last week of September, the company added. India’s food-safety watchdog banned the sale of Maggi noodles in June, alleging the product contained impermissibly high-levels of lead. In response, the company recalled the popular noodles from shelves in India.
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The company said its own tests didn’t detect high levels of the toxic metal and a court ruling in August ordered Indian authorities retest samples of the noodles. Fresh tests cleared the samples earlier this month. Nestlé India has resumed manufacturing the noodles in India and is keen to reintroduce its Maggi 2-Minute Noodles to shelves at the earliest, said Suresh Narayanan, chairman and managing director of the company. Mr. Narayanan, who was earlier the managing director, was appointed chairman of the company after Antonio Helio Waszyk retired earlier this month. In July, Nestlé’s Indian arm posted its first quarterly loss in decades for the April to June period. One in every five dollars Nestlé India earned before the ban in India came from the sale of its Maggi noodles, its best-selling product here. Nestlé had earlier said it would revamp its noodle packaging in the wake of the food scare. It has also launched an advertising campaign in the country, including front-page newspaper advertisements, to revive consumer trust. Nestlé India is 62.76% owned by its parent company Nestlé. The rest of the company is traded. Nestlé SA earlier in October reported a 2% fall in sales and lowered its guidance for organic sales growth, as the Swiss food giant navigated problems that included the food safety scare in India and the strong Swiss franc. The company said sales for the nine months ended Sept. 30 fell to 64.86 billion Swiss francs ($68.16 billion) from 66.22 billion francs a year earlier. Nestlé SA doesn’t report full earnings at the nine-month stage. It will report full-year results Feb. 18 next year. (WSJ).
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