Nestlé’s Indian arm has reported its first quarterly loss in over three decades, following the Indian food safety authority’s decision to freeze sales of its Maggi brand of instant noodles in June after high levels of lead were found.
According to a company statement released on Wednesday, the net loss for the second quarter (April to June) amounted to INR644 million (CHF9.7 million) compared with a profit of INR2.8 billion the previous year. Overall sales decreased by around 20% during the difficult quarter.
“The company was faced with a very unusual situation during the quarter and the financial results for the quarter are therefore not comparable to previous periods,” the statement said.
Nestlé India admitted that the recall of 28,000 tonnes of Maggi noodles was responsible for the poor quarterly results.
“The Maggi issue disrupted business,” it said, adding that the cost of withdrawing the product from the market had resulted in exceptional costs of over CHF68 million that had a big impact on the bottom line.
Nestlé’s appeal against the ban on sales of Maggi noodles is currently being heard in Mumbai’s High Court. The company is challenging the testing procedure and the manner in which the ban was imposed by India’s food safety body.
Nestlé India has also announced the appointment of a new managing director to turn things around after the Maggi crisis. Suresh Narayanan, formerly CEO of Nestlé Philippines, will officially take charge from August 1.