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ITC Q1 profit rises 13% YoY to Rs 3,174 crore; cigarette revenue up 6%

Sales of the cigarette segment increased to Rs 5,433.40 crore from Rs 5,127.59 crore.

, ET Bureau|
Updated: Aug 02, 2019, 10.32 PM IST
ITC Q1 profit meets Street estimates, rises 13% YoY to Rs 3,174 crore
ITC Q1 profit meets Street estimates, rises 13% YoY to Rs 3,174 crore
Kolkata: ITC on Friday posted 5.7% growth in revenue from operations at Rs 11,502.82 crore for the first quarter ending June 30, 2019 missing street estimates. The company attributed the sales growth to the paperboards, hotels and non-cigarette FMCG business. The cigarette-FMCG-hotel major’s net profit for the quarter grew by 12.6% at Rs 3173.94 crore over the same period last year.

In its earnings release, ITC said it “posted a steady performance during the quarter amidst sluggish demand conditions.”

The conglomerate’s flagship cigarette business gross revenue grew by 5.9% at Rs 5433.4 crore during the quarter, while the business profit went up by 8.1% at Rs 3849.13 crore. ITC said the performance during the quarter was impacted by weakness in overall demand apart from the challenges to the legal cigarette industry due to high taxation and regulatory regime.

Brokerages were expecting over 10% growth in ITC’s sales while net profit to jump anywhere between 12-14% during the quarter. They had expected around 10% growth in the cigarette business sales. While the company declared its financials after trading hours, ITC’s scrip had closed 1.12% lower at Rs 264.6 in the Bombay Stock Exchange on Friday.

ITC’s future bet, the non-cigarette FMCG business which comprises of packaged food, personal care and stationary, reported 6.6% growth in gross revenue at Rs 3060.05 crore during the first quarter. The earnings before interest, taxes, depreciation and amortization (EBITDA) went up by 41% to 180.69 crore despite higher investment in brand building, gestation and cost of new categories and plants.

The company said non-cigarette FMCG business revenue is up by 8% in the core FMCG segments, excluding the lifestyle retail business, which too gets factored in this business. ITC said while there is a “marked slowdown in the FMCG industry across urban and rural markets”, categories like packaged atta, potato chips, premium cream biscuits, noodles, hand wash, body wash and notebooks drove sales.

ITC, which operates the country’s second largest hotel chain, reported 15% growth in hotel business segment revenue at Rs 392.59 crore during the quarter, while segment result was down to Rs 10.39 crore (Rs 13.22 crore) which the company attributed to additional depreciation pertaining to new properties. The company, however, said hotel business EBITDA grew by 18% during the quarter and the newer properties in Hyderabad, Goa and Kolkata reported good response.

The conglomerate’s paperboards, paper and packaging segment posted 12.6% jump in revenue at Rs 1527.53 crore driven by strong growth in value-added paperboards segment and product mix enrichment. However, the packaging and printing business was impacted by slowdown in the FMCG industry and exports.

The agri-business reported 14.6% growth in gross revenue at Rs 3611.23 crore while gross profit growth was subdued at 4.3% at Rs 202.95 crore which ITC said was due to subdued demand for leaf tobacco in international markets, steeper depreciation in currencies, limited trading opportunities in oilseeds and pulses.
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