ITC Q4 net up a mere 7.8% as cigarettes fail to rise from ash

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Kolkata | Updated: May 23, 2015 5:55 AM

Growth of 11.3% in the non-cigarette FMCG segment, 8.1% in the agribusiness segment and 8.7% in the cigarette segment drove the top line and bottom line increase.

FMCG major ITC on Friday reported a 7.8% y-o-y increase in fourth quarter net profit to Rs 2,361.18 crore, up from Rs 2,278.01 crore in the same period a year ago. Turnover for the period stood at Rs 9,188.25 crore, up from Rs 9,145.14 crore. Profit before tax increased 6.4% y-o-y to Rs 3,348.40 crore.

The company attributed the muted growth to the continued impact of a steep tax hike on cigarettes, sluggish demand in the FMCG industry, start-up costs in the juice category, lack of trading opportunities in agri-commodities and costs relating to rationalisation of safety matches manufacturing operations.

For FY15, itc reported 9.4% year-on-year growth in net profit to Rs 9,607.73 crore on the back of revenue growth across segments. While profit before tax rose 10.6% y-o-y to Rs 13,997.52 crore during the year, net revenue increased 9.7% to Rs 36,083.21 crore.


Growth of 11.3% in the non-cigarette FMCG segment, 8.1% in the agribusiness segment and 8.7% in the cigarette segment drove the top line and bottom line increase. The 9.4% net profit increase was reported after adjusting for liability written back in the second quarter of FY14 (towards rates and taxes and interest thereon pertaining to earlier years, aggregating Rs 192.68 crore).

Earnings per share for the year stood at Rs  12.05 against Rs 11.09 in the previous year. Cash flows from operations aggregated Rs 13,534.65 crore compared to Rs 10759.50 crore in the previous year.

The company recommend a dividend of Rs 6.25 per share against last year’s Rs 6 per share. Total cash outflow in this regard will be Rs 6,029.56 crore against previous year’s Rs 5582.90 crore.

The FMCG segment’s revenues crossed the Rs 9,000-crore mark last fiscal, registering 11.3% growth despite sluggish demand and intense competition. The segment absorbed high start-up costs for juices and gums and higher costs of deodorants launched in 2013, apart from a host of new launches in existing categories.

Demand in the branded packaged food category remained subdued for the second year in a row. The company, however, increased its scale of operations and improved its market share in bakery and confectionary. The Sunfeast range was augmented and the business switched the popular range of cream biscuits under a new sub-brand, Bounce. ITC also forayed into the cakes segment with the launch of Yumfills Whoopie Pie.

In snack foods, staples, spices and ready to eat categories, the company gained market share while in personal care products it posted robust growth. The acquisition of ‘Savlon’ and ‘Shower to Shower’ trademarks and other intellectual property rights for identified markets from Johnson & Johnson further strengthened its position in the personal care space.

In the cigarette segment, despite a challenging regulatory and taxation environment, the company strengthened its portfolio across segments to reinforce its leadership.

Hotel segment’s revenues saw modest 4.8% growth despite a weak pricing scenario in the light of an additional 8,000 rooms in Delhi, Mumbai, Bengaluru and Chennai over the last two years. The segment was impacted mainly by an additional depreciation charge for the quarter  and gestation costs of new properties — ITC Grand Bharat, near Gurgaon and My Fortune, Bengaluru.


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