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Business News/ Companies / Company Results/  ITC Q4 profit down 1.3% on subdued demand

ITC Q4 profit down 1.3% on subdued demand

ITC said it remains confident of navigating the short-term challenges and creating sustained value for all stakeholders

A man talks on his mobile phone as he walks past an ITC office building in Kolkata. (REUTERS)Premium
A man talks on his mobile phone as he walks past an ITC office building in Kolkata. (REUTERS)

Mumbai: After reporting flat Q4 numbers for FY24, FMCG major ITC Ltd said it expects a recovery in rural demand in line with forecasts by market researcher Nielsen IQ (NIQ). Rural markets had outpaced urban markets for the first time in 15 months, NIQ had said earlier this month.

“While consumption demand remained subdued in Q4 FY24, improving macro-economic indicators, prospects of a normal monsoon and green shoots witnessed in rural demand recovery after several quarters, augur well for revival in consumption demand in the near-term," the company said in its earnings statement released Thursday.

“With its focus on consumer centricity, purposeful innovation, agility, and execution excellence, the company remains confident of navigating the short-term challenges and creating sustained value for all stakeholders."

ITC on Thursday reported a 1.3% drop in its standalone net profit to 5,020.20 crore in the three months ended March 2024, amid weak demand during the quarter.

Net profit for the maker of Gold Flake cigarettes and Bingo chips was slightly below the 5,150 crore estimated by a Bloomberg poll of 20 analysts.

Revenue from operations grew 1.4% to 17,752.87 crore from 17,506.08 crore a year earlier. The revenue figure exceeded Street estimates of 17,191 crore.

The company saw a decline in revenues in agriculture and paperboards, and paper and packaging businesses during the quarter.

The company's expenses jumped 2.4% to 12,017.71 crore year-on-year during January-March.

Also read: ITC focuses on premium goods in hunt for margins

For the full year, the company’s gross revenue remained flat at 69,446.20 crore, while profit was up 8.9% to 20,422 crore.

“During the year, the company reassessed its provisions relating to uncertain tax positions for earlier years based on a favourable order of the Honourable Supreme Court received during the year which resulted in a credit of 468.44 crore in the current tax expense for the year," the company said.

FMCG revenue (excluding cigarettes) rose 7.1% to 5,300.17 crore in the three months ended 31 March, driven by staples, biscuits, snacks, dairy, homecare and incense sticks. For the full year, the business grew 9.6% year-on-year to 20,966.83 crore.

For FMCG-others segment, earnings before interest, taxes, depreciation and amortization or Ebitda for the quarter stood at 616.42 crore.

In the FMCG segment, the company reported a sequential uptick in certain commodity prices. Competitive intensity remained high, including from local or regional players in certain categories, the company said.

Also Read: Can ITC’s boosters help it take off?

Meanwhile, segment revenue for cigarettes rose 7% to 7,924.84 crore, sharply ahead of Street estimates. Segment PBIT or profit before interest and tax was up 5% year-on-year.

“Sharp cost escalation in leaf tobacco and certain other inputs and increase in taxes was largely mitigated through improved mix, strategic cost management and calibrated pricing," the company said.

On Thursday, its board recommended a final dividend of 7.50 per share. ITC shares closed at 441.20 a piece, up 0.33% on the NSE. Earnings per share for the year stood at 16.39 against 15.15.

Meanwhile, revenue for the company’s agriculture business was down 13.3% year-on-year to 3101 crore in the March quarter.

“Operating environment remained challenging due to various policy interventions of the Government of India to ensure food security and control inflation," the company said. ITC witnessed steep increase in green leaf prices that exerted pressure on margins.

“During the full year agri business segment was impacted by trade restrictions on agri commodities. Strategic portfolio (comprising value-added agri products) and leaf tobacco revenues up 18% year-on-year in Q4. Geopolitical tensions and climate emergencies have led to concerns over food security and food inflation; trade restrictions imposed by the government on agri commodities limit business opportunities for the segment," the company said.

Additionally, the National Company Law Tribunal (NCLT) has directed convening a meeting of shareholders of ITC on 6 June 2024 to consider and approve the demerger of ITC Hotels Ltd from ITC Ltd.

Also read: ITC's demerger plan disappoints investors, market value dips



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Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 23 May 2024, 06:06 PM IST
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