ITC slips after weak Q1 show

ITC fell 1.5% to Rs 196.7 on BSE after the FMCG major reported a 26.19% decline in net profit to Rs 2342.76 crore on a 17.4% fall in net sales to Rs 9501.75 crore in Q1 June 2020 over Q1 June 2019.

Profit before tax (PBT) tumbled 34.98% to Rs 3128.43 crore during the quarter. Total tax expense slumped 52% to Rs 785.67 crore in Q1 FY21 over Q1 FY20. The result was announced after market hours on Friday, 24 July 2020.

Revenue from sale of cigarettes stood at Rs 3,853.79 crore (down 29.07% YoY) while total FMCG revenue, including cigarettes, was at Rs 7,228.36 crore (down 14.89% YoY).

The company has considered the possible effects that may arise out of the still unfolding COVID-19 pandemic on the carrying amounts of property, plant & equipment, intangible assets, investments, inventories, trade receivables, etc. Based on the current estimates, the company does not expect any significant impact on such carrying values.

ITC said its hotels segment was severely impacted with operations coming to a standstill due to restrictions on travel and hotel operations. Negative operating leverage weighed on segment profits but aggressive reduction in controllable fixed costs partly mitigated the impact.

On a consolidated basis, ITC's net profit declined 25.3% to Rs 2567.07 crore on 17.22% decline in net sales to Rs 10478.46 crore in Q1 FY21 over Q1 FY20.

ITC is engaged in the marketing of fast-moving consumer goods (FMGC). The firm operates through four segments: FMCG; hotels; paperboards, paper and packaging, and agri business. ITC is the market leader in cigarettes in India.

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