ITC's FMCG biz to break even in FY14: Credit Suisse

Tobbaco-to-hospitality major ITC’s FMCG business is expected to break even in the next fiscal and imporove in profitability thereon. The company recently expanded its presence in the Rs 7,000-crore skin care market in India by launching Cell Renew, a skin care regimen comprising a face moisturiser, hand crème and body lotion.

According to latest survey by Credit Suisse, Within FMCG, the packaged food business (60% of FMCG revenues) is now profitable, delivering mid/single digit margins, which should improve further. The personal care business is gainng in scale, which could bring down losses. “We expect the FMCG business to break even in FY14 and improve in profitability thereon,” the report said.

ITC has built one of India’s top three FMCG business among listed players in revenue terms in just over a decade. The EBIT loss margin for the business has cme down sharply, from 16% in FY 09 to less than 2% in the past few quarters.

During the last quarter of the current fiscal net sales of the company's noncigarette FMCG business, which comprises packaged food and personal-care products, grew 30% to Rs 1,782.70 crore. The segment reduced losses by 50% to Rs 23.98 crore during the quarter.

ITC had said sales growth of its packaged food business was led by its biscuit brand Sunfeast, Sunfeast Yippee! noodles and Bingo! range of snacks.

In personal care, the company strengthened its presence in soaps with a premium range and also launched newer products in the deodorants, body lotion, hand moisturiser and skin toner segments.

The report also said that ciggarette penetration stands quite low in India comared to other emrgin countries indicating the high growth potential. ITC is a dominant player with 75% market share in branded cigarettes, hence is well poised for growth.