ITC is expected to open on a positive note on Friday with its April-June quarter financials in line with analysts' expectations.
Cigarette volumes remained flat in the reporting quarter, against some expectations of a drop, while cigarette sales grew an expected 6.6% to Rs 8,774.16 crore on the back of price hikes effected in December and post Budget.
Operating profit from cigarettes grew a handsome 8.9% at Rs 3,274.14 crore against Rs 3,004.58 crore.
Performance on the cigarette front, which contributes 45% of ITC's business showed little disruption due to the implementation of goods and services tax (GST) as widely expected as sales largely happen through neighbourhood grocery and paan shops, which would mostly be outside the ambit of the new tax regime.
Overall profit for the diversified conglomerate grew 7.4% to Rs 2,560.50 crore for the June quarter against Rs 2,384.67 crore in the year-ago period.
This came on an operating income growth of 4% at Rs 13,800.42 crore against Rs 13,253.06 crore a year back.
Apart from cigarettes, ITC's revenue from other FMCG brands was up 9% to Rs 2600.89 crore while profits came at Rs 5.43 crore against a loss of Rs 4.52 crore a year back.
ITC's relatively new FMCG business suffered heavily during the quarter with operating profit dropping to just Rs 5.43 crore against Rs 55.56 crore earned in the March quarter. In the year ago June quarter, the business was at a loss though.
Muted demand environment, destocking of FMCG products in trade channels and heavy discounting ahead of GST implementation coupled with the ongoing restructuring of retail footprint and trade presence by the lifestyle retailing business are some of the factors that weighed heavy on its FMCG businesses, ITC said in a statement.
Profit from hotel business improved significantly on-year from Rs 1.22 crore in the previous year to Rs 5.31 crore on a turnover base of Rs 305 crore against Rs 287 crore.
"Hotels segment revenue was up 6.1%, aided by improvement in the average room rate and healthy growth in food & beverage sales. Profitability improvement was driven by operating leverage and cost management. A ban on the sale of liquor from outlets in proximity to highways resulted in revenue loss at certain properties particularly, ITC Grand Chola in Chennai," ITC said in a statement.
NOT UP IN SMOKE
- Apart from cigarettes, ITC’s revenue from other FMCG brands was up 9%
- Overall profit grew 7.4% to Rs 2,560.50 crore for the June quarter
- ITC’s FMCG business operating profit drops to just Rs 5.43 crore
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Apart from cigarettes, ITC's revenue from other FMCG brands was up 9% to Rs 2600.89 crore while profits came at Rs 5.43 crore against a loss of Rs 4.52 crore a year back.
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