FMCG-to-hotels-to tobacco giant ITC Ltd has posted a better performance with a modest 10 per cent growth in net profit and 8.3 per cent rise in revenue, breaking its recent lackluster streak of low single digit growth.
Analysts say the recent numbers are a result ovolume growth in cigarettes after 12 quarters and robust agribusiness performance. ITC had posted a net profit of Rs 2,384.7 crore for the April-June quarter on revenue of Rs 13,253.1 crore.
According to The Economic Times: The steady performance was achieved despite continuing pressure on legal cigarette industry volumes, sluggish demand in the FMCG industry, and subdued operating conditions in the hotels, paperboards, paper and packaging businesses, ITC said in its earning release.
ITC’s shares closed nearly flat at Rs 250.65 on the BSE on Thursday.
According to Edelweiss, ITC’s cigarette sales volume in the quarter went up 3-4 per cent year-on-year as compared to an initial estimate of 2 per cent. ITC, which accounts for three out of four cigarettes sold legally in the country, however said its business in this segment remained subdued. The segment reported 6.4 per cent growth in sales at Rs 8,230.6 crore, while gross profit improved 8 per cent to Rs 3,004.6 crore.
FMCG Business Growth
Revenue grew by 9.5 per cent during the quarter amidst weak demand conditions and a price deflationary scenario particularly in the Personal Care business. Most categories witnessed margin expansion driven by enhanced scale of operations and product mix enrichment.
The company said the results recorded improvement in comparison to the corresponding period in the previous year despite higher investment in brand building, consumer and trade promotion activities and gestation costs relating to new categories viz. Juices, Dairy, Gums and Health & Hygiene segment in the Personal Care Products Business.
Branded Packaged Foods Businesses
This segment posted healthy growth in revenue led by Staples, Snacks and Noodles categories despite sluggish demand conditions.
– In the Staples, Snacks and Meals Business, ‘Aashirvaad’ atta continued to perform well consolidating its leadership position across markets. During the quarter, the Business launched ‘Aashirvaad Sugar Release Control Atta’, which has received encouraging consumer response.
– During the quarter, the Business also augmented the recently launched ‘ITC Master Chef’ range of premium blended spices with the addition of four new variants in select markets in South India.
– The ‘Bingo!’ range of snack foods registered healthy growth driven by the ‘Tedhe Medhe’ and ‘Mad Angles’ sub-brands.
– In the Instant Noodles category, YiPPee! sustained its high growth trajectory leveraging a superior value proposition anchored on best-in-class product quality, safety and taste.
Sunfeast Mom’s Magic range of premium cookies grew rapidly on the back of superior product attributes and sustained investment in brand building.
The Biscuits portfolio stood expanded during the quarter with the launch of Delishus Expressions in three premium variants.
Portfolio premiumisation continued in the Confectionery category with the share of Re 1 and above products increasing during the quarter. The range of higher value products in the Confectionery category was also augmented with the launch of Jelimals gummy bears under the Jellicious’ sub-brand.
Dairy and Beverages Business
The B Natural range of juices continued to garner increasing consumer patronage. During the quarter, the juices portfolio was augmented with new launches
The quarter also marked ITC’s entry into the Dairy Whitener category under the brand Sunfresh. The product is currently available in the North-East markets.
It also saw the launch of a luxury range of chocolates under the Fabelle brand at an exclusive Fabelle Chocolate Boutique in ITC Gardenia, Bengaluru.
Personal Care Products Business
This business posted robust revenue growth during the quarter driven by higher volumes and richer product mix. The business continues to leverage the recently acquired trademarks – Savlon and Shower to Shower – to expand its product portfolio and gain access to newer consumer segments and markets.
New variants in the hand wash and antiseptic liquid categories launched under the Savlon brand continue to gain traction with consumers.
The Business also augmented its skin care portfolio during the quarter with the launch of Vivel Cell Renew – Aqua Quench Cleansing Mousse.
The company continues to make steady progress in building several state-of-the-art owned integrated consumer goods manufacturing and logistics facilities across regions in line with long-term demand forecast.