Food Companies Saw Margin Squeeze in Q1, Expect Reprieve This Qtr

That food companies are under stress has been proved by their first-quarter performance, with margins witnessing pressure.

- Sharleen D'Souza

While it will take time for them to benefit from lower raw-material costs, analysts expect this to start showing from this quarter (July-September).

Raw-material prices like those of palm oil were high in April-June, but those have eased since then. This is because of companies sitting on inventories with prices at elevated levels.

"The quarter was impacted by elevated consumption prices across the commodity portfolio... However, we have noticed stabilizing prices for edible oil and cocoa, a declining trend in coffee and stabilizing to modest increase in pricing of milk," said Suresh Narayanan, chairman and managing director, Nestle India, in its results release.