New Delhi: ITC Ltd, India’s largest cigarette maker, on Friday reported 12.6% increase in its June quarter stand-alone profit, in line with Street estimates.
Net profit of the Sunfeast biscuits and Gold Flake cigarettes maker rose to ₹3,173.94 crore in the three months ended 30 June from ₹2,818.68 crore in the year-ago period. Revenue from operations for the June quarter grew by 5.7% from the year-ago period to touch ₹11,502.82 crore, according to the company’s filings to the stock exchange.
A Bloomberg poll of 16 analysts pegged the cigarette-to-biscuit makers’ profit for the quarter at ₹3,153.70 crore, with stand-alone revenue projections at ₹11,758.90 crore. “The results were largely in line, with cigarette volume growth at 3% year-on-year," said Abneesh Roy, senior vice-president, Edelweiss Securities.
Earnings before interest, taxes, depreciation and amortization (Ebitda) stood at ₹4,565 crore.
The company, which also sells personal care products, reported segmental revenues for the quarter.
While the cigarettes business of ITC grew by 6% to touch ₹5,433.40 crore, earnings before interest and taxes for the cigarettes business was up 8%. Segmental revenue at the company’s FMCG-others business, which includes packaged food and personal care products, grew 6.6% to ₹3,060 crore; the segment’s EBIT grew 55% to ₹78.02 crore.
“Cigarette revenue and volumes growth was moderate, while cigarette EBIT growth was healthy at 8%," said analysts Naveen Trivedi and Siddhant Chhabria of HDFC Securities, adding that growth in the company’s non-cigarettes business was broad-based.
“The FMCG-others segment delivered a resilient performance during the quarter amid a marked slowdown in the FMCG industry across urban and rural markets," it said. This was largely driven by its branded food business.
During the quarter, the company added new variants to its brands, including a premium Fiama hand wash and a premium version of its Engage body perfumes. Chocolate brand Fabelle saw more additions during the quarter, while its packaged atta brand Aashirvaad, too, added new variants.
Cigarettes and consumer goods apart, ITC’s other businesses reported lower margins.
Revenue from the hotel segment grew 15% to ₹392.59 crore “driven by the recently commissioned hotels, ITC Kohenur, Hyderabad, and ITC Grand Goa, Resort and Spa," it added.
Its paperboards, and paper packaging segment revenue was up 13%. Revenue from agriculture business was up 14.6% to ₹3,611.23 crore. “The recent foray into the frozen snacks segment under the ‘ITC Master Chef’ brand, buoyed by encouraging consumer response, continues to be scaled up. However, lack of trading opportunities in oilseeds and pulses, subdued demand for leaf tobacco in international markets, relatively steeper depreciation in currencies of competing origins in recent years and adverse business mix weighed on segment results," the company said.
ITC’s results come amid muted consumer demand across the board. Last month research and insights firm Nielsen had revised its forecast for the country’s fast moving consumer goods market lowering it from its previous forecast of 11-12% to 9-10%.
ITC has been pushing to diversify its business as it seeks to expand its consumer goods business.
At the company’s 108th annual general meeting last month in Kolkata, ITC reiterated its plans to expand its fast-moving consumer goods business by adding newer segments under its portfolio and even looking at strategic acquisitions, in line with efforts to reduce its dependence on the tobacco business.