Home / Companies / ITC Q1 profit rises 24.5%

Kolkata: Consumer goods maker ITC Ltd on Thursday said net profit in the quarter till June grew 24.5% over the same period last year to 1,332.72 crore, thanks to robust revenue growth and increase in profit margin in most of its key businesses.

The company’s net revenue during the quarter jumped 19.5% year-on-year (y-o-y) to 5,767.47 crore.

ITC rose 5.25, or 2.6%, to 206.05 on the Bombay Stock Exchange, even as the bourse’s benchmark Sensex fell 222.73 points, or 1.21%, to 18,209.52 points.

Operating profit for the cigarette business, ITC’s main money spinner, grew 20.8% over the corresponding period of last year to 1,576.69 crore.

Despite the increase in value added tax in some states, the operating profit margin of the cigarette business expanded by 232 basis points over the same period last year to 54.86%. One basis point is one-hundredth of a percentage point. Net revenue from cigarettes was up 15.7% y-o-y at 2,873.56 crore.

ITC’s combined operating profit from other businesses at 359.13 crore was 34.3% higher than in the same period last year. Besides healthy growth in operating profit from businesses such as hotels and paperboards, the company managed to pare losses in its non-cigarette consumer goods business to 76.28 crore in the quarter till June from 89.25 crore in the corresponding period of fiscal 2011.

Operating income from ITC’s hotel business jumped 33.2% y-o-y to 51.31 crore on the back of a 9.8% growth in revenue. The company said in a release that it remains bullish on the business and continues to invest in developing premium hotels in Kolkata and Chennai, besides negotiating joint ventures and management contracts for smaller hotels.

ITC’s operating income from paper and paperboards, its second-most profitable business, was up 20.4% y-o-y at 226.96 crore, driven by a 20.9% growth in net revenue at 959.57 crore. The company said it was investing in a new carton manufacturing line “to cater to growing demand".

Higher trading volumes in soya, wheat and coffee helped ITC clock 25.8% growth in revenue in its agricultural commodity business. On a revenue of 1,707.14 crore, the company posted an operating profit of 157.14 crore from the segment, 21.1% higher than the same period last year.

ITC’s revenue from its non-tobacco consumer goods business grew 19.6% over the corresponding period of last year to 1,197.76 crore, driven largely by 21% growth in the sale of packaged food products, the company said in a statement.

“The business achieved significant improvement in profitability driven by an enriched product mix, better realizations, smart sourcing, improved market servicing and cost-management actions," ITC said in its statement.

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