ITC pre-tax profit rises 4.5%

ITC met market expectations with a nearly six per cent rise in net income for the December quarter from the same period a year before, at ~13,308 crore.

Led by its non-cigarette consumer goods, hotels and agro businesses, the pre-tax profit rose 4.5 per cent to ~5,049 crore.

The net profit beat Street estimates to grow by around 29 per cent to ~4,050 crore.

During the quarter, ITC got a tax credit of ~340 crore after opting for the concession offered by the Taxation Laws (Amendment) Ordinance.

The company said the macro economic environment continued to be adversely impacted, as reflected in Gross Domestic Product growth and persistent weakness in both consumption demand and investments.

“Delayed arrival of the kharif crop due to spatial variations in rainfall, especially close to the harvest season, commodity price inflation together with disruptions in parts of the country, exacerbated the already challenging operating environment during the quarter,” it said.

Yet, it presumes the expectation of a good rabi crop, backed by government’s measures such as reduced corporate tax rates and initiatives to boost infrastructure and export, augur well for revival of the economy.

Despite persistent weakness, especially in rural markets, backed by market liquidity conditions and illicit trade in cigarettes, its tobacco division had a 5 per cent increase in revenue at ~5,311 crore, with a 6 per cent increase in profit at ~3,756 crore.

The launch of Gold Flake Indie Mint, Gold Flake Neo and Classic Rich & Smooth in the premium end, and focused offers under brands American Club, Wave, Flake and others, helped sales.

In the non-cigarette fast moving consumer goods (FMCG) business, there was a 6 per cent growth in income ~3,312 crore.

Operating earnings rose 48 per cent to ~256 crore. Categories with relatively higher rural salience were hit more. ITC said it continued to mitigate the slowdown’s impact through measures such as enhancing of direct reach, targeted offers, investing in fast-growing channels and lines of credit to select trade partners.

With “all-round improvement” in its hotels business across new and existing properties, segment revenue grew 22 per cent to ~552 crore. Higher room rates and operating leverage aided margin expansion. A 101-room luxury property, Welcomhotel Amritsar, was comissioned.

The ITC Kohenur (Hyderabad), Grand Goa and Royal Bengal, all new properties, continued to get a good response. In the agro business, revenue grew nine per cent to ~2,095 crore as it leveraged trading opportunities, especially in oilseeds, pulses and coffee, and scaled up the value-added products.

Owing to subdued demand in the FMCG and liquor industries, revenue from the paperboards, paper and packaging business remained flat at ~1,555 crore.