Cigarette-to-hotel conglomerate ITC reported a marginal decline in net profit in the April to June quarter of the current financial year (Q1 FY25), primarily dragged down by paperboard, paper and packaging, hospitality, and agri businesses.
ITC recorded a 0.26 per cent year-on-year (Y-o-Y) drop in consolidated net profit in Q1 FY25 to Rs 5,091.59 crore from Rs 5,104.93 crore in the year-ago period.
The company reported consolidated gross revenue of Rs 20,029.60 crore for Q1 FY25, up by 7.5 per cent compared to Rs 18,639.48 crore a year back.
Revenue net of excise at Rs 18,457 crore came in higher than the Bloomberg consensus estimate of Rs 17,892 crore. However, net profit fell short of the Bloomberg estimate, which pegged it at Rs 5,451 crore.
Sequentially, gross revenue was up three per cent and net profit down 0.56 per cent.
ITC said that the performance was in a challenging macroeconomic and operating environment. Cigarettes and non-cigarettes fast-moving consumer goods (FMCG) delivered resilient performance amidst subdued demand conditions, it said. There was also a high base effect in some of the operating segments.
The heavy-lifting cigarette segment recorded a 5.8 per cent Y-o-Y growth in revenue at Rs 8,842.22 crore in Q1 FY25. Pre-tax profits from the segment reached Rs 5,255.06 crore in Q1 FY25, a 6.29 per cent increase compared to the year-ago period.
The company noted that stability in taxes backed by deterrent actions by enforcement agencies enabled volume recovery for the legal cigarette industry from illicit trade.
Revenue from the non-cigarettes FMCG segment stood at Rs 5,498.80 crore, up by 6.3 per cent Y-o-Y. Pre-tax profit for Q1 FY25 was at Rs 479.17 crore, an increase of 10.4 per cent Y-o-Y.
The newly launched ITC Ratnadipa in Colombo, Sri Lanka, weighed on the hospitality business at a consolidated level. The hotel segment clocked in a 14.29 per cent Y-o-Y increase in revenue at Rs 713.30 crore in Q1 FY25. However, pre-tax profit at Rs 122.21 crore was down by 9 per cent Y-o-Y.
ITC said that seven managed properties were operationalised during the quarter, including Fortune Resort & Wellness Spa, Bhaktapur, Nepal. It is the first Fortune property outside India.
Regarding the paperboards, paper, and packaging segment, the company said that green shoots of demand recovery emerged during the quarter. However, the performance remained impacted largely due to cheap Chinese supplies in international markets, including India, and a surge in domestic wood prices.
The segment recorded a 6.78 per cent Y-o-Y drop in revenue to Rs 1,976.85 crore in Q1 FY25. Pre-tax profit was down by 45.6 per cent to Rs 256.15 crore.
In the agri business, cost escalation in leaf tobacco and other agri-commodities weighed on margins during the quarter. Depreciation cost of the new nicotine and nicotine derivatives manufacturing facility also reflected. Pre-tax profit from the segment stood at Rs 344.60 crore, down by 2.2 per cent Y-o-Y.
Revenue from the segment at Rs 6,997.89 crore in Q1 FY25 was, however, up 22.19 per cent driven by value-added agri products.
First Published: Aug 01 2024 | 6:31 PM IST
