ITC net rises 22.5%

ITC Ltd, the cigarettes-to-hospitality major, has posted a 22.5 per cent increase in post-tax profits on the back of a price increase in cigarettes, beating market expectations. Profit after tax for the quarter ended December 31 was Rs 1,701 crore, while pre-tax profits grew 22 per cent to Rs 2,477 crore.

There was a 27 per cent increase in non-cigarette profits. Profits from cigarettes, still the lion’s share of overall profits at 74 per cent (ITC has been trying for years to reduce dependence on cigarettes for revenue), grew 20 per cent.

The stock lost 3.6 per cent and closed at Rs 201.35 on the Bombay Stock Exchange on concern over only a moderate volume growth in cigarettes, primarily due to the increase in prices, even as the benchmark Sensex closed 0.6 per cent higher.

An ITC statement said continuing discriminatory taxation and a polarised regulatory framework against cigarettes in India was a major cause of concern. “The differential rate of value added tax on cigarettes across the states only encourages unscrupulous tax arbitrage,” it said.

Net turnover was higher by 14.2 per cent to Rs 6,195 crore, driven by branded packaged foods, personal care, agricultural goods and cigarettes. The non-cigarette fast moving consumer goods segment posted revenue growth of 25 per cent. The hotels business posted a top line of Rs 311 crore and improved its profits by 15 per cent to Rs 102 crore.

Among all the segments, FMCG ‘Others’ (branded packaged foods, garments and stationery products and personal care) posted losses, but it came down from Rs 73.6 crore in the quarter ended December 31, 2010, to Rs 46.6 crore in the December quarter of 2011.

Earnings per share was Rs 2.19, compared to Rs 1.81 in the same period last year.