Nestle SA Reg Shs. Ser. B Spons (ADR)(OTCMKTS:NSRGY) stock has been moving north on the chart since the company’s India reported that it will re-launch Maggi noodles as lab tests showed lead content in noodles were within approved limits. Shares of Nestle gained 1.87% on Thursday and closed at $77.45. The stock price declined in June after the Indian food safety regulator stated to recall the snack. This move resulted in the first ever quarterly loss recorded by Nestle in over 15 years.
The highlights
The approval from the court is definitely a positive for Nestle as Maggi noodles contributed nearly 25% in total revenue. Nestle expects the noodles to be in the stores in 2016. Tests by India’s food regulator revealing unsafe amounts of lead content in the Maggi noodles led to the snack being pulled off shelves and bans in states. Following company’s legal dispute, the Bombay High Court overturned the ban and permitted the resumption of sales, only if additional tests were stated acceptable.
The tests
The Maggi noodles were stated safe in 90 samples covering six variants by three labs that were ordered by the court. However, the sale of Maggi noodles will resume after newly made products are approved by the three labs. India’s recall of noodles eroded nearly 0.3% off Nestle nine-month sales growth. Now, the company is working on reestablishing the snack after being off the shelves for as many as six months.
Changed outlook
Nestle SA Reg Shs. Ser. B Spons (ADR)(OTCMKTS:NSRGY) reduced its full-year guidance as recall of its popular Maggi noodles in India dampened sales and under calculated Skin Health rebates hurt its profits. Talking about the performance, the CEO Paul Bulcke stated that there is disappointment as the one-off expenses are really high, and they overcast fundamentally good things. Also, Nestle failed to pursue its pricing plans resulting in a outlook drop.
