ITC Q3 net profit grows marginally to Rs 2,652.8 crore

New Delhi: Diversified group ITC Ltd on Friday posted a marginal rise in stand-alone net profit at Rs 2,652.8 crore for the third quarter ended December as its cigarette business continued to be under pressure, coupled with a demand slowdown in FMCG segment.

The Kolkata-based company, which had posted a net profit of Rs 2,635 crore during the same period of 2014-15, also said
lack of trading opportunities in agri-commodities also impacted its performance.

Net sales in the period under review were up 3.43 percent to Rs 9,102.7 crore as against Rs 8,800.2 crore of October-December of the previous fiscal, ITC said in a statement.

"The company's performance during the quarter remained subdued, reflecting severe pressure on legal cigarette industry volumes, lack of trading opportunities in agri-commodities and sluggish demand environment prevailing in the FMCG industry," ITC said in a statement.

Revenue from the total FMCG business, including cigarettes, increased 6.21 percent to Rs 6,857.5 crore, from Rs 6,456.1 crore in the corresponding quarter of 2014-15.

During the quarter, revenue from cigarettes increased 5.74 percent to Rs 4,379.9 crore, from Rs 4,141.9 crore in the year-ago period.

"The performance of the cigarettes business remained muted during the quarter due to taxation and regulatory headwinds facing the legal cigarette industry in India," the company said.

Similarly, revenue from the other FMCG segment was up 7.06 percent to Rs 2,477.7 crore during October-December as against Rs 2,314.1 crore last fiscal.

"Weak demand - particularly in rural markets - coupled with a price deflationary environment and supply chain disruption caused by heavy rainfall and floods in Chennai impacted revenue growth," said ITC.

ITC's other FMCG segment includes branded packaged foods business such as staples, snacks and meals, dairy and beverages and confectionery; apparel, education and stationary products, personal care products, safety matches and aggarbattis.

Revenue from hotel business grew 4.54 percent to Rs 345.3 crore, compared with Rs 330.3 crore in the same period last year.

"Despite a challenging operating environment, the segment revenue recorded a growth of 4.5 percent driven by improvement in room occupancy and good growth in the food and beverage segment," the company said.

It further said during the quarter, ITC's hotels in Chennai also had to contend with business disruption due to heavy rainfall and floods in the city.

ITC's revenue from agri business segment fell 7.31 percent to Rs 1,481 crore, from Rs 1,597.9 crore in the same period last year.

"Segment revenue and profits for the quarter were impacted by lack of export opportunities in wheat, soya and coffee, besides subdued demand for Indian leaf tobacco exports," said ITC.

Besides this, a steep currency depreciation in competing geographies also weighed on the prospects of agri-commodity exports from India, it added.

Revenue from paperboards, paper and packaging business was up 5.11 percent at Rs 1,260 crore, compared with Rs 1,198.8 crore in the same period last year.

"The muted demand environment prevailing in the FMCG and cigarette industry weighed on the performance of the paperboards, paper and packaging segment," it said.

"Reduction of import duties under various free trade agreements, especially with ASEAN (which became effective January 1, 2014), coupled with cheap imports from China continued to adversely impact the domestic paper and paperboard industry".

Meanwhile, ITC in a separate filing said its Chief Financial Officer Rajiv Tandon has been appointed its director on the board. "He is responsible for finance, accounting, internal audit and investment subsidiaries of the company," said ITC.

The stock today settled at Rs 308.65, up 0.69 percent, on BSE.