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ITC Q3 net jumps 21% to Rs 2,052 cr on robust sales

Multi-business conglomerate ITC, which has a presence in cigarettes, FMCG, hotels, paperboards and agri-produce, on Friday beat Street expectations by posting a quarterly profit growth of 20.62% year-on-year at Rs 2,051.85 crore.

Multi-business conglomerate ITC, which has a presence in cigarettes, FMCG, hotels, paperboards and agri-produce, on Friday beat Street expectations by posting a quarterly profit growth of 20.62% year-on-year at R2,051.85 crore. The company had posted a net profit of R1,700.98 crore during the same period of the previous fiscal. The growth was primarily fuelled by higher cigarette sales during the quarter as the business contributes almost 50% to its overall revenues.

During the October-December period, ITC?s net sales increased 23% to R7,627.07 crore against R6,196.43 crore clocked during the same period in the last fiscal.

?The stellar performance by the company is particularly remarkable when viewed against the backdrop of challenging business environment in which it was achieved, namely, a slowdown in economic growth, sustained high inflation and impact of steep hike in taxes on cigarettes during the year,? the company said in a statement.

Though the company does not give a guidance, it did point to the regime of higher taxes and control on the sale of cigarettes by various state governments. ?The cigarette industry in India continues to be impacted by a discriminatory taxation and regulatory policy framework. The high incidence of tax on cigarettes has created tax arbitrage opportunities leading to the growth of illegal cigarettes in the country. Consequently, legal industry volumes have come under severe pressure,? ITC said.

During the quarter, ITC?s net revenue sales in cigarettes increased 13% to R3,657 crore, helped by the price hikes that it undertook in the last half of 2012. ITC?s FMCG business that includes biscuits, wafers, soaps and shampoos, among others, increased 30% to R1,783 crore. The total net revenue from the FMCG segment, including cigarettes, increased 18.2% to R5,440.06 crore.

The company also reported strong growth in its agribusiness where net sales jumped 43.14% to R1,630.97 crore, while the paperboards, paper and packaging segment saw an 8.49% increase to R1,061.55 crore for the quarter ended December 31. The company said its investments in a new paperboard facility at Bhadrachalam and the new packaging and printing facilities at Haridwar are nearing completion and are expected to become operational shortly.

ITC?s hotels business, however, remained slow during the reporting period amid the overall slowdown in the industry. Net sales in the hotel business rose by 11.02% to R309.46 crore, but profit declined by 45.46% to R55.49 crore, the company said in its statement. ITC said growth in the hospitality vertical was muted during the quarter as the sector continued to be adversely affected by the weak economic conditions prevailing in key international source markets and India.

During the period under review, the company said its cost of materials consumed increased 22% to R2,374.48 crore against R1,946.22 crore in the year-ago period.

The ITC share closed up 1% at R287.05 on the Bombay Stock Exchange on Friday.

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First published on: 19-01-2013 at 02:24 IST
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