New Delhi:Nestle India Ltd, the local unit of the world’s biggest food company, on Friday reported a 1% increase in fourth quarter profit as demand for certain brands across the company’s confectionery, milk products and prepared dishes category were under pressure.

Net profit rose to Rs. 281.7 crore in the quarter ended 31 December from Rs. 278.9 crore in the year earlier, the maker of Maggi noodles and Kit-Kat chocolates said on Friday. Net sales increased by 4.6% to Rs.2,252.3 crore.

Local sales grew 3.7% mainly on account of higher net realization and change in product mix. Revenue from exports to affiliates bolstered the company’s profit, as the segment saw a 21% increase in revenue.

Indicating that 2013 was a challenging year for the company as consumers cut monthly budgets because of rising prices, Etienne Benet, managing director of Nestle India, said, “The growth dynamics in some core products and categories like Maggi Noodles, Nescafé and Kit Kat has compensated the headwinds in some of the other businesses.

“The economic environment remains unchanged and we expect the current pressure to continue, in particular on input costs," Benet added.

According to analysts, domestic growth across certain categories will remain under pressure.

The growth momentum for Nestle has slowed barring a few core categories such as Noodles and chocolates, said Amnish Aggarwal, an analyst at brokerage Prabhudas Lilladher Pvt. Ltd. There is no near-term recovery that seems possible in Nestle’s portfolio, he said, adding that the company may need to alter its product mix and capture high-growth categories to boost sales.

Benet said that an overhaul in the company’s product mix was underway.

The newly appointed chief executive of Nestle’s local unit said that some “tough decisions" and “swift adaptations" will be undertaken by the company as it “evolves its product portfolio, that is more focused on premium and value-up ranges, while protecting our current business base, as well as taking necessary decisions to gear up and make the organization more efficient to take on the current and future trade evolution and competitive challenges."

Rising inflationary pressures have softened consumer demand, specially in urban areas, where consumers are either cutting down on discretionary spends or postponing purchases.

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