ITC Q1 profit rises 10% to ₹ 2,819 crore, beats estimates
ITC’s Q1 profits were affected by incremental tax burden of 20% on cigarettes after GST implementation
Kolkata: ITC Ltd posted a 10% increase in net profit in the June quarter as higher taxes on cigarettes outweighed healthy performance by other segments.
The cigarette and consumer goods producer recorded a profit of ₹2,818.68 crore in the three months ended 30 June. Gross sales grew 13.5% on-year to ₹18,171.66 crore.
The financial performance was however largely in line with market expectations.
Despite healthy performance by almost all segments, ITC’s profits took a hit from an incremental tax burden of 20% on cigarettes post implementation of the goods and services tax, and a drop in profit from its commodities trading business.
Operating profit from cigarettes in the June quarter grew 8.7% y-o-y to ₹3,558.39 crore, which is 83% of its total pre-tax profit of ₹4,299.94 crore. The company has been complaining about continued pressure on its cigarette sales.
Ahead of its earnings, ITC shares on Thursday closed at ₹287.15 apiece on BSE, up 0.4% in a flat market.
ITC’s emerging non-cigarette consumer goods business turned in a pre-tax profit of ₹127.76 crore in the June quarter, up 86% over the same period last year. Segment revenue adjusted for change in the indirect tax regime, grew 14% y-o-y to ₹2,870 crore. The robust growth in pre-tax profit from the segment was due to “enhanced scale, product mix enrichment and cost management initiatives”, ITC said in a statement.
Revenue from the hotel business grew 12% during the quarter to ₹341.28 crore, while pre-tax profit jumped from ₹5.31 crore to ₹13.22 crore driven by “higher room rates and strong food and beverage sales”. The company, which is building four hotel properties, opened its new hotel in Hyderabad last quarter.
The paper, paperboards and packaging segment delivered a 15% rise in pre-tax profit to ₹295.66 crore in the June quarter, “driven by strategic investments in imported pulp substitution and process innovation leading to improved pulp yield”, among other initiatives, ITC said.
The commodities trading business was hit by “pressure on legal cigarette volumes and lower export incentives”, it said. Pre-tax profit from the segment fell 17% last quarter to ₹194.51 crore. Revenue, however, rose 14% to ₹3,151.27 crore.
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