Hit by Covid, ITC’S PBT dips 34% to ~3,435 cr

Cigarettes, hotels, paper and paperboard revenues drag profit

Asharp decline in cigarettes, hotels, paper and paperboard revenues because of the nationwide lockdown to contain the Covid-19 pandemic dragged diversified conglomerate, ITC’S profit before tax (PBT) 33.81 per cent to ~3,435.88 crore in the June quarter.

Revenues from operations saw a dip of 17.21 per cent to ~10,478.45 crore. Profit after tax was down by 25.5 per cent to ~2,562.73 crore. Unprecedented disruption in operations because of the lockdowns weighed on performance, the company said.

Revenues from cigarettes were down by about 29.5 per cent to ~4,330.05 crore, as manufacturing operations resumed midMay. However, operations have been rapidly scaled up thereafter to pre-covid levels and currently all factories are operational, ITC said.

The pandemic also weighed heavily on hotel operations with revenues down to ~24.92 crore during the quarter compared to ~411.60 crore in the same period last year.

Paperboards, paper & packaging segment's performance was impacted by lower offtake from end-user industries, with revenues dropping by 32.80 per cent to ~1,026.44 crore.

However, growth in exports partly mitigated the weak domestic demand. The silver lining, however, was the non-cigarettes FMCG business.

Revenues from the segment were up 10.12 per cent to ~3,378.84 crore and profits up by 61.54 per cent.

Segment Ebitda (earnings before interest, taxes, depreciation, and amortisation) grew by 42 per cent to 257 crore, with margins expanding by 170 bps YOY, notwithstanding the gestation costs of new categories/facilities and the incremental operating costs due to the pandemic, ITC said. “The branded packaged foods businesses delivered a robust performance during the quarter driven by atta, noodles, biscuits and fresh dairy. Most major categories gained market share during the quarter,”the company added.

In the segment, while the personal care products business recorded substantial growth in revenue driven by demand for hygiene products such as hand sanitizers, handwash, antiseptic liquids and floor cleaners in the wake of the pandemic, the ‘Engage’ range of fragrance products witnessed a tepid quarter because of significant decline in demand. Revenue from the agri business was also up by about 3.9 per cent driven by trading opportunities, mainly in oilseeds and rice.

Abneesh Roy, executive vice-president - institutional equities, at Edelweiss Securities, said cigarette volumes and food had done better than expectations but overall sales were in line.