ITC Ltd on Thursday reported its fiscal second quarter earnings with profit at Rs 4992.87 crore, up 1.9 per cent in comparison to Rs 4898.07 crore during the corresponding quarter of FY24. It posted revenue from operations at Rs 22,281.89 crore, up 15.6 per cent as against Rs 19,270.02 crore during the same period of previous financial year, driven by Agri Business and Hotels.
ITC acknowledged the subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs (leaf, wood, etc.) witnessed during the quarter.
Q2 performance across business verticals
FMCG- Others: ITC’s FMCG segment reported revenue growth of 5.4 per cent YoY to Rs 5578 crore amidst muted demand conditions. The growth, it said, was driven by staples, biscuits, snacks, frozen snacks, dairy, premium soaps, homecare and agarbatti. However, Notebooks was impacted by high base effect and opportunistic play by local brands led by sharp drop in paper prices. The segment EBITDA was up 2 per cent YoY, posting a drop of 35 bps in margins amidst inflationary headwinds in input costs.
FMCG- Cigarettes: The segment reported net revenue growth of 7.3 per cent YoY with differentiated and premium offerings continuing to perform well. While the business continues to counter illicit trade, ITC said that the market standing is reinforced through strategic portfolio and market interventions with focus on competitive belts. It said that severe cost escalation in leaf tobacco was partially mitigated through improved mix, strategic cost management and calibrated pricing actions.
Hotels: The Hotels segment delivered strong performance on high base with revenue growth of 12.1 per cent YoY, driven by F&B, Retail and Wedding segments. EBITDA margin expanded 70 bps YoY driven by higher RevPAR, operating leverage and strategic cost management. The F&B portfolio was augmented with the launch of 2 new outlets – ‘Ottimo’ at ITC Grand Goa and ‘Avartana’ at ITC Maurya. In line with the ‘asset right’ strategy, nine managed properties were operationalised and management contracts for fifteen properties were signed-up during the first half of the year. ITC said that 30 properties were added to the portfolio in the last 24 months.
Agri Business: The segment recorded revenue growth of 47 per cent YoY led by leaf tobacco & value added agri products. The company posted strong growth in Leaf Tobacco exports leveraging strong customer relationships and new business development, and value-added agri portfolio (e.g. Coffee, Fruits & Vegetables, Spices) too performed well. While agility in operations, strong customer relationships and new business development enabled robust growth in leaf tobacco exports, ITC said that steep escalation in green leaf tobacco costs and surge in ocean freight weighed on margins. This, it added, was partially mitigated through strategic cost management initiatives.
Paperboards, Paper and Packaging: The segment posted revenue growth of 2.1 per cent YoY driven by exports. ITC said that the segment remained impacted due to low priced Chinese supplies in global markets including India, soft domestic demand conditions and unprecedented surge in wood prices. It added that subdued realisation, surge in domestic wood prices and ocean freight continue to weigh on margins.