ITC’s December quarter profit rises 21%

Net revenue grows 23% to Rs.7,627 crore on robust sales of cigarettes, farm commodities, consumer goods

Manish Basu

First Published: Fri, Jan 18 2013. 01 36 PM IST

Revenue from consumer goods such as food, apparel and personal care products rose 30% to `1,782.70 crore. Loss from the segment during the quarter was cut to `23.98 crore from `46.63 crore last year, and from `30.31 crore in the September quarter. Photo: Indranil Bhoumik/Mint

Updated: Sat, Jan 19 2013. 12 46 AM IST

Kolkata: ITC Ltd posted a 20.6% increase in net profit for the December quarter as it cut losses in the consumer goods business and sustained a high operating profit margin in the cigarette segment.

Net profit rose to Rs.2,051.85 crore, or Rs.2.57 per share, for the three months ended December from a year ago. Net revenue grew 23% to Rs.7,627 crore, thanks to robust sales of cigarettes, farm commodities and consumer goods such as food and personal care products, the firm said in a note on Friday.

Operating profit margin narrowed 75 basis points to 36.4% from the year earlier, Angel Broking said in its earnings analysis. One basis point is one-hundredth of a percentage point.

Investor reaction indicated earnings were largely in line with expectations. The stock rose 0.67% to Rs.287.05 on BSE. The benchmark Sensex rose 0.38% to 20,039.04 points.

Net revenue from cigarettes rose 13% to Rs.3,657.36 crore, while pre-tax profit from the segment jumped 21% to Rs.2,233.54 crore. Sequentially, cigarette sales by value grew 8%.

Operating margin from cigarettes (calculated on net revenue) was at 61.06%, marginally lower than 61.4% in the quarter till September.

Though a well-diversified conglomerate with interests in hotels, farm products and paper, 75% of ITC’s pre-tax profit of Rs.2,957.19 crore in the quarter ended 31 December came from cigarettes. This is a shade lower than the previous quarter, in which cigarettes contributed 78% of pre-tax profit.

The company said its newly launched cigarettes—less than 65mm in length—were being rolled out nationally.

Revenue from consumer goods such as food, apparel and personal care products rose 30% to Rs.1,782.70 crore. Loss from the segment during the quarter was cut to Rs.23.98 crore from Rs.46.63 crore last year, and from Rs.30.31 crore in the September quarter.

The company could break even in the consumer goods segment in two-three quarters, said V. Srinivasan, an analyst at Angel Broking.

Though revenue from the hotel business grew 11% to Rs.309.46 crore from the year ago, pre-tax profit plunged 45.45% from last year to Rs.55.49 crore. The company said the segment was affected by poor tariff due to a spurt in the supply of hotel rooms and a decline in tourist traffic.

Revenue from farm commodities such as leaf tobacco, soya and wheat jumped 43.4% from last year to Rs.1,630.97 crore because of improved exports. Net profit from the segment rose 21.85% to Rs.172.63 crore from the year earlier, but dropped 33.5% sequentially.

Revenue from the paper and paperboards segment at Rs.1,061.55 crore was 8.5% higher than the same period a year ago, while pre-tax profit from it remained almost unchanged at Rs.228.58 crore, showing a decline in operating margin. Compared with the September quarter, net profit from the paper and paperboards segment was 19% lower.