ITC net increases 8.7% to Rs 2,425 cr

Written by fe Bureau | Kolkata | Updated: Nov 1 2014, 06:44am hrs
Multi-business conglomerate ITC, which has presence in cigarettes, FMCG, hotels, paper boards and agri-produce, on Friday broadly met analysts estimates on profit front during the July-September quarter but disappointed with its topline and operational numbers. Net profit increased 8.7% year-on-year to R2,425 crore supported by other income and higher revenue. Adjusted profit after tax grew by 15.6% as there was a R193 crore one off costs included in other expenses last year.

Net sales during the period increased 14.8% to R8,930 crore. Ebitda increased by 9.9% year-on-year to R3,395 crore but margin declined 170 basis points to 38%. Other income increased 44.7% at R356.2 crore.

Commenting on the earnings, ITC said it posted another quarter of impressive growth in revenue and profits notwithstanding a challenging business environment exacerbated by a steep hike in excise duties on cigarettes for the third year in succession as announced in the Union Budget 2014. The government had increased excise duty by 72% on filter cigarettes of length not exceeding 65 mm in this years Budget.

The cigarettes business, which accounts for around 48% of its total revenues, grew 14% on a yearly basis at R4,251 crore with net sales rising 12% to R2,882 crore on the back of price hikes. The FMCGs other businesses, which includes packaged foods, apparel, education stationeries etc, saw an increase in revenues by 12% on yearly basis to R2,196 crore while the hotels business reported a 5.9% growth at R261.6 crore. The agri business saw a 16.2% growth at R2,059 crore. Revenue from paperboard, paper and packaging business increased 8.9% to R1,284 crore.

The company said that the cigarette industry is facing discriminatory and punitive taxation coupled with the growing incidence of smuggling and illegal manufacturing. It has also raised concerns over the recent directions of the government to cover 85% of display area on both sides of a cigarette pack as part of the statutory warning by April 1, 2015 stating it will adversely impact the domestic legal cigarette industry vis--vis both illegal cigarette trade and other unbranded tobacco products.

The companys shares on Friday closed up 0.11% at R355.25 on the BSE.