ITC net rises 16% on farm biz revenue, but short of expectations

Written by fe Bureau | Kolkata | Updated: Jul 30 2014, 16:24pm hrs
ITC on Monday reported a 15.6% year-on-year jump in the June quarter net profit to R2,186.39 crore, a shade below expectations. The company, however, felt it has been able to maintain robust growth despite a challenging business environment. The companys profit before tax increased 18.2% y-o-y to R3,265.67 crore while the total income from operations jumped 24.9% y-o-y to R9,164.42 crore.

The company attributed the increase in net profit to the growth in agri-business revenue driven by trading opportunities in wheat, soya and coffee. Higher capacity utilisation in paperboards, paper and packaging segment following recent investments also contributed to the growth. ITCs non-cigarette FMCG segment registered a 10.9% revenue growth despite deceleration in the industry growth rate. Paperboards, paper and packaging segments revenue increased 10.8%.

Tax expenses during the quarter increased to R1,079.28 crore from R870 crore in the corresponding period last fiscal. Earnings per share went up to R2.75 in the quarter from R2.39 in the quarter a year ago.

Although the companys flagship cigarette business has been operating under a restrictive environment with share of legal cigarettes witnessing a de-growth in the countrys total tobacco consumption, the cigarette segments net revenue during the quarter increased 18.7% y-o-y to R4,201.06 crore on the back of price hikes, which gave a cushion to the significant tax increase in the last Budget.

According to the companys statement, ITCs unwavering focus on providing world-class products enabled it to sustain its leadership position in the industry. Several initiatives were launched in the quarter across the portfolio in terms of pack modernisation and introduction of new variants to consolidate market standing.

However, revenues in the hotel segment remained muted in the quarter coupled with R14.3 crore worth of additional depreciation charge in the useful life of fixed assets in accordance with the provisions of the Companies Act 2013.

During the quarter, the company commissioned My Fortune Bengaluru, a 115-room flagship property under the Fortune banner in the upscale segment and made significant progress in the construction of ITC Grand Bharat a super luxury golf and spa resort at the Classic Golf Resort, Manesar. The project is nearing completion with the hotel expected to start operations shortly. Construction activity at the luxury hotel projects in Kolkata and Hyderabad are on track, the company statement said.