CorporateITC beats expectations, Q2 net profit up 26%
Agri business was a profit driver, growing 128% to Rs 174.1 cr.
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ITC, the cigarettes-to-hotels conglomerate, has recorded a 26 per cent increase in net profit at Rs 1,009 crore in the quarter ended September 30, from Rs 802 crore in the same period last year, led by revenue growth in almost all its businesses, except hotels. Net income grew 18 per cent to Rs 4,345 crore, up from Rs 3,682 crore in the same quarter last year.
The market was expecting a modest net sales growth of around 11 per cent and net profit growth of around 14 per cent. It reacted positively, pushing the ITC stock up by 5 per cent, to close at Rs 259.85 on the Bombay Stock Exchange today.
With the exception of the hotels segment, hit by the global economic slowdown, net revenues of the company’s FMCG business (of which cigarettes comprise almost 85 per cent), FMCG-Others (retail, personal care, packaged foods, garments, education and stationery products), agri business and paper & packaging segments grew by 21 per cent, 14 per cent, 19 per cent and 13 per cent, respectively.
ITC said in a statement: “Profitability improved on the back of better product mix, smarter sourcing of inputs and a series of targeted cost management actions. Investments in brand building in the personal care and branded foods businesses continue to impact the segment results of ‘FMCG-Others’.”
The company’s cigarettes business continues to be its mainstay, growing 24 per cent during the quarter to Rs 1,251 crore, which was 84 per cent of total profits after interest but before exceptional items. In the same quarter of the previous year, cigarettes accounted for 87 per cent of all profits.
Agri business was a major profit driver, growing 128 per cent to Rs 174.1 crore, driven by the growth in leaf tobacco exports. ITC managed to pare its losses from the FMCG Others business to Rs 85 crore during the quarter, compared to a loss of Rs 116.55 crore in the same period last year. Its profits from the composite FMCG business was Rs 1,166 crore during the quarter, a growth of 31 per cent over the Rs 890 crore in last year’s corresponding period.
The branded packaged foods business continued to expand, with sales growing by 13 per cent over the previous year.
But, profits from hotels dropped 54 per cent to Rs 31.56 crore, compared to the same quarter of the previous year, while paperboard profits grew 52.34 per cent to Rs 186.22 crore.