KOLKATA: ITCBSE 0.98 % posted a 10% increase in net profit and an 8.3% rise in revenue for the fiscal first quarter, shrugging off the pattern of flat to-low-single-digit growth that the conglomerate had been caught in for six straight quarters.
The company didn’t give any specific reasons for the results, but analysts attributed it to volume growth in cigarettes after almost 12 quarters and robust agribusiness performance. The cigarettes-to-hotels group posted a net profit of Rs 2,384.7 crore for the April-June quarter on revenue of Rs 13,253.1 crore.
The steady performance was achieved despite continuing pressure on legal cigarette industry volumes, sluggish demand in the FMCG industry, and subdued operating conditions in the hotels, paperboards, paper and packaging businesses, ITC said in its earning release.
Analysts said cigarette volume growth during the quarter was more than what was estimated. While the results were declared aftermarket hours, ITC’s shares closed nearly flat at Rs 250.65 on the BSE on Thursday.According to Edelweiss, ITC’s cigarette sales volume in the quarter went up 3-4% year-on-year as compared to an initial estimate of 2%. ITC, which accounts for three out of four cigarettes sold legally in the country, however said its business in this segment remained subdued. The segment reported 6.4% growth in sales at Rs 8,230.6 crore, while gross profit improved 8% to Rs 3,004.6 crore. In the non-cigarette FMCG business — which ITC is betting on as its future growth driver — sales rose 9.5% to .`2,385.6 crore, while losses reduced to .`4.52 crore from Rs 7.97 crore.The company said most categories witnessed margin expansion driven by enhanced scale of operations and product mix enrichment. ITC said the packaged foods businesses posted healthy growth in revenue led by staples, snacks and instant noodles, while the personal care business went through a price deflationary scenario.
ITC, which owns and runs the second largest hotel chain in the country, reported flat revenue growth in the business at Rs 287.36 crore, while the segment reported a reported a Rs 1.22 crore profit as compared to a loss of Rs 7.25 crore in the same period last year.
The company said the sector continued to be hurt by weak demand and pricing scenario against the backdrop of excessive room inventory in key markets and sluggish macroeconomic environment. Agri business revenue rose 20.1% to Rs 2,794.1 crore, which the company said was driven by wheat sales in the domestic market and exports of leaf tobacco. The business profitability grew at a slower pace by 1.5% at Rs 237.3 crore, since the margin in wheat trading is less.
ITC said its paperboards, paper and packaging businesses remained impacted by the subdued demand environment prevailing in the FMCG and legal cigarette industries. The paper and paperboard industry was hit by zero-duty imports under free trade agreements with ASEAN countries and cheap supplies from China. This business reported a low single-digit decline in sales and gross profit at Rs 1,322.9 crore and Rs247.9 crore, respectively.
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