Cigarettes-to-FMCG major ITC on Friday reported a 12.13 per cent year-on-year rise in its standalone net profit to
Rs 2,669.47 crore for the quarter ended March 31, 2017, from Rs 2,380.68 crore in the period year ago as its revenue from operations during the quarter grew 6.15 per cent y-o-y, which was broadly in line with market expectations. The country’s largest cigarette maker’s revenue from operation during the March quarter rose to Rs 15,008.82 crore from Rs 14,138.78 crore during the year-ago period. ITC, in a statement, said it saw a modest recovery in the performances during the period under review after severe disruption in operations in the December quarter last fiscal due to currency crunch post demonetisation. However, wholesale channel and rural markets remained sluggish.
While cigarette revenue grew 4.79 per cent y-o-y at Rs 8,954.94 crore during the January-March period, other FMCG business revenue posted a higher 6.45 per cent y-o-y growth at Rs 2,885.76 crore during this period, the company said in a BSE filing. Operating profit from the cigarette business increased by close to 8 per cent y-o-y to Rs 3,258.76 crore during the quarter under review.
According to analysts, cigarette volume growth during the period might be in the range of 1-2 per cent, although the company made a price hike during this period.Other FMCG business posted a de-growth of more than 29 per cent y-o-y in its operating profit to Rs 55.56 crore during March quarter last fiscal against Rs 78.60 crore in the corresponding period previous fiscal. However, the diversified conglomerate’s EBITDA during the quarter posted a 7.5 per cent y-o-y increase at Rs 3,875 crore.
ITC said the FMCG industry witnessed further deceleration in growth rate during the last financial year with demand conditions remaining subdued for the fourth successive year. “The much anticipated pick-up in consumption expenditure on the back of good monsoons in 2016, low inflation and implementation of the recommendations of the 7th Pay Commission did not play out fully. The incipient recovery in demand witnessed around the middle of the year was adversely impacted by the cash crunch especially during the third quarter. Further, the industry had to contend with sharp escalation in the cost of major commodities … leading to compression in margins,” it added. On its hotel business, the company said the operating environment in the hospitality sector remained challenging. “While second half initially indicated signs of pick-up in the Hotels industry, collateral impact on the economy on account of currency crunch limited the recovery. Segment revenue recorded a growth of 4.3 per cent during the year …,” it informed.