ITC Q3 net profit up 29 pc at Rs 4,047.87 crore

FMCG major ITC on Friday reported a 29.03 per cent increase in consolidated net profit at Rs 4,047.87 crore for the third quarter ended December 2019.

The company had posted a net profit of Rs 3,136.95 crore in October-December quarter of the previous fiscal.

Net sales during the quarter under review rose 5.71 per cent to Rs 13,220.30 crore as against Rs 12,506.05 crore in the corresponding period in previous fiscal, ITC said in a regulatory filing.

"The company posted a steady performance during the quarter amidst a particularly challenging operating environment," ITC said in a post earning statement.

According to the company, the macro-economic environment continues to be adversely impacted as reflected in deceleration in GDP growth and persistent weakness in consumption demand and investments.

"Delayed arrival of the Kharif crop due to spatial variations in rainfall, especially close to the harvest season, commodity price inflation together with disruptions in certain parts of the country exacerbated the already challenging operating environment during the quarter," ITC said.

"Expectations of a good Rabi crop and a slew of measures announced by the government in recent months including reduction in corporate tax rates, initiatives to boost infrastructure and promote exports, augur well for the revival of the economy," it added.

ITC's total expenses during the third quarter rose 5.25 per cent to Rs 8,779.14 crore as compared with Rs 8,340.61 crore in the year-ago quarter.

During the quarter, revenue from total FMCG business was up 4.66 per cent to Rs 9,265.31 crore as against Rs 8,852.05 crore in the year-ago period.

Total FMCG business comprises segments like cigarettes and FMCG-others.

Revenue from cigarettes stood at Rs 5,944.86 crore in the October-December quarter, up 5.31 per cent from Rs 5,645.05 crore in the corresponding period last fiscal.

"Performance during the quarter reflects the persistent weakness in the overall demand environment, especially in rural markets and wholesale channel, tight market liquidity conditions and the increasing salience of illicit trade especially at the premium end," ITC said.

Revenue from FMCG-others segment was up 3.53 per cent to Rs 3,320.45 crore as against Rs 3,207 crore a year ago.

"The FMCG-Others Segment delivered a resilient performance during the quarter which witnessed a slowdown in overall growth rates both in urban and rural markets. Categories with relatively higher rural salience remain the most impacted," it said.

FMCG-others segment of ITC consists of branded packaged foods like staples, snacks, meals, dairy and beverages, confections, apparel, education and stationery products, personal care products, safety matches and incense sticks.

ITC's hotel business revenue rose 21.13 per cent to Rs 574.26 crore during the quarter as compared with Rs 474.06 crore in the corresponding period last fiscal.

"The business posted a strong performance during the quarter with segment revenue and segment EBITDA growing by 22.2 per cent and 40.1 per cent respectively. There was all-round improvement, with both existing and new properties recording robust increase in RevPAR (revenue per available room) and F&B sales. Higher room rates and operating leverage aided margin expansion," ITC said.

Revenue from agri-business segment rose 10.43 per cent to Rs 2,258.87 crore as against Rs 2,045.38 crore in the December quarter of the previous fiscal.

"In the agri business segment, growth in segment revenue was driven by trading opportunities in oilseeds, pulses & coffee and scaling up of value added segments (spices and frozen snacks)," ITC said.

Subdued demand for leaf tobacco in international markets accentuated by relatively steeper depreciation in currencies of competing origins and adverse business mix weighed on segment results, it added.

Paperboards, paper and packaging segment revenue rose marginally by 0.83 per cent to Rs 1,555.36 crore as against Rs 1,542.51 crore of Q3/FY2018-19