ITC Q2 net up marginally at Rs2,431 crore

ITC Ltd has reported a marginal (0.3 per cent) increase in its net profit to Rs2,431.25 crore during the quarter ended 30 September 2015-16, from Rs2,425.16 crore during the comparable quarter of the previous fiscal, on the back of muted performance across various sectors.

ITC said its performance during the quarter remained subdued reflecting the unprecedented pressure on legal cigarette industry volumes, lack of trading opportunities in agri-commodities and sluggish demand environment prevailing in the FMCG industry coupled with prolonged disruption in the instant noodles category due to regulatory challenges. 

Net revenue for the quarter registered a 1.41 per cent year-on-year decline at Rs8,804.70 crore while profit before tax increased by 3 per cent to Rs3,690.15 crore. Earnings per share for the quarter stood at Rs3.03.

ITC had reported net revenue of Rs8,930.32 crore during the corresponding period last fiscal, according to a BSE filing.

ITC, the country's biggest cigarette maker, said its cigarettes business continued to be impacted by unprecedented pressure on legal cigarette industry volumes.

''The performance of the cigarettes business remained muted during the quarter due to taxation and regulatory headwinds facing the legal cigarette industry in India. The operating environment for the legal cigarette industry in India was rendered even more challenging with two rounds of sharp increase in Excise Duty – in July 2014 and February 2015,'' it said in a statement.

The company's cigarette segment revenue grew only 1.56 per cent year-on-year to Rs4,317.18 crore during July-September FY16..

''Over the last three and a half years, the incidence of excise duty and VAT on cigarettes, at a per unit level, has gone up cumulatively by 98 per cent and 124 per cent, respectively, which is exerting severe pressure on legal industry volumes even as illegal trade grows unabated,'' the company pointed out.

The company's FMCG-Others segment posted a revenue growth of 7.1 per cent amidst a sluggish demand environment and prolonged disruption in the instant noodles category.

Segment revenue registered an underlying growth of nearly 10 per cent. during the quarter, while most categories witnessed expansion in gross margin driven by product mix enrichment and stable input costs.

ITC said its segment results were impacted due to gestation costs of new categories, viz, juices, gums and dairy and higher brand investments to reassure consumers on the quality and safety of Yippee! Noodles.

Revenue from the hotel business grew by close to 11 per cent to Rs290.04 crore from Rs261.59 crore in the same period of last fiscal due to improvement in room occupancy and growth in the food and beverage segment.

Agri business segment revenues were impacted by lack of trading opportunities in wheat, coffee and soya.

Paperboards, paper and packaging segment was impacted by the continuing slowdown in the FMCG and cigarette industry, reduction of import duty under various regional free trade agreements and cheap imports from China.

ITC said its confections business posted robust growth in revenue driven by the 'Mom's Magic' range of premium cookies while recent product launches received encouraging response from consumers.