ITC reports its June quarter profit up by 12.6 per cent
Kolkata, Aug 2 (IBNS): The Kolkata-headquartered Indian multinational conglomerate, ITC, said that its profit was up 12.6 per cent to Rs 3173.94 for the quarter ended June 30, 2019, while reporting its standalone financial results on Friday.
Gross Revenue for the quarter stood at Rs 11361.35 crores, up 6%, driven mainly by Paperboards, Hotels and FMCG-Others (excluding the Lifestyle Retailing Business).
The company said its total comprehensive income stood at Rs 2960.93 crores (previous year Rs. 2897.10 crores).
Earnings Per Share for the year stood at Rs 2.59 (previous year Rs 2.31).
Segment-wise details as reported by the company:
FMCG-Others
The FMCG-Others Segment delivered a resilient performance during the quarter amidst a marked slowdown in the FMCG industry across urban and rural markets.
Segment revenue grew by 8% approximately on a comparable basis (excluding the Lifestyle Retailing Business) led by Atta, Potato Chips, Premium Cream Biscuits and Noodles in the Branded Packaged Foods Business, Liquids (Handwash & Bodywash) in the Personal Care Products Businesses and Notebooks in the Education & Stationery Products Business.
Segment EBITDA at Rs. 181 crores recorded a growth of 41% despite stepped up investments in brand building, gestation and start-up costs of new categories / new facilities.
The Branded Packaged Foods Businesses delivered a steady performance during the quarter, anchored on continued focus on innovative product launches and communication campaigns in conventional and digital media.
In the Staples, Snacks and Meals Business, ‘Aashirvaad’ atta recorded healthy growth and launched Aashirvaad Nature’s Super Foods, comprising Gluten Free Flour, Ragi Flour and Multi-Millet Mix which are naturally gluten free, rich in dietary fibre and a source of protein.
In the Snacks category, it launched the snacks range called ‘Bingo! Startersand in the Instant Noodles category, it launched ‘YiPPee! Quik Mealz – Asian Surprise’.
In the Confections Business, apart from Dark Fantasy Choco Fills, the recently launched 'Bounce Cake' variants and ‘Candyman Fantastik’, also recorded robust growth .
In the Dairy & Beverages Business, the 'B Natural' range of juices performed well in the target markets while ‘Aashirvaad Svasti’ pouch milk continued to gain strong traction in Bihar and West Bengal. Similarly, the ‘Sunfeast Wonderz Milk’ range of milk shakes has received encouraging response and is being extended to other markets.
During the quarter, the ‘Fabelle’ range of chocolates was augmented with the launch of four variants of centre filled luxury bars, viz., Fire, Wood, Tiramisu and Strawberry Cheesecake.
In the Personal Care Products Business, Liquids (Handwash and Bodywash) and the ‘Nimyle’ range of herbal floor cleaners performed well and were extended to new markets.
Product range in the Bodywash segment was augmented with the launch of ‘Fiama’ Scents in two variants.
The quarter also witnessed the launch of Fiama Handwash in the premium segment in three variants and the augmentation of Engage range of perfumes with the launch of ‘Engage’ L’amante, a premium perfume for men and women.
During the quarter, the manufacturing capability of ICML Trichy was augmented with the commissioning of state-of-the-art lines for Finger Snacks, Atta and Biscuits.
The Education and Stationery Products Business strengthened its position in the Notebooks category .
The dedicated manufacturing facility for notebooks being set up in Gollapudi, Andhra Pradesh, is nearing completion.
Cigarettes
A punitive and discriminatory taxation and regulatory regime, together with sharp increase in illegal trade in recent years, continues to pose significant operating challenges to the legal cigarette industry in the country, the company said.
Performance during the quarter was also impacted by weakness in the overall demand environment.
According to the company, tax incidence on cigarettes increased by over 20% in 2017-18, representing the combined impact of transition to GST and increase in Excise Duty announced in the Union Budget 2017.
The company introduced new variants such as Classic Rich & Smooth, Classic Verve Low Smell and Gold Flake NEO which, along with recently introduced brands/variants such as American Club, Player’s Gold Leaf and Wave continue to strengthen their market standing.
Hotels
The Business recorded a steady performance with Segment Revenue growing by 15% during the quarter driven by the recently commissioned hotels - ITC Kohenur, Hyderabad and ITC Grand Goa, Resort & Spa, Goa.
However, the performance of existing hotels was relatively subdued due to slowdown in the conferences and banqueting segment.
While Segment EBITDA posted strong growth of 18%, additional depreciation charge pertaining to the new properties weighed on Segment results.
The Business unveiled its latest offering with the opening of first phase of ITC Royal Bengal, a Luxury Collection Hotel, comprising 254 rooms along with five signature restaurants, on 1st June, 2019.
The Business made steady progress during the quarter in the construction of an ITC Hotel in Ahmedabad and WelcomHotels in Amritsar, Guntur & Bhubaneswar.
Agri Business
In line with its focus on strengthening the value-added products portfolio, the Business launched 'maida' in the food service channel suited for bakery and pizza products.
The recent foray into the Frozen Snacks segment under the ‘ITC Master Chef’ brand, continues to be scaled up.
However, lack of trading opportunities in Oilseeds and Pulses, subdued demand for leaf tobacco in international markets, relatively steeper depreciation in currencies of competing origins in recent years and adverse business mix weighed on Segment results.
The deep rural linkages and agri-commodity sourcing expertise resident in the Agri Business, including value-addition through identity preservation, traceability and certification are a critical source of competitive advantage for the company.
During the quarter, the Business established a robust milk sourcing network in West Bengal to cater to the increasing requirements on the back of the growing franchise of the Aashirvaad Svasti range of dairy products.
Paperboards, Paper & Packaging
The Paperboards Business continued to record robust growth driven by strong volume growth in the Value Added Paperboard segment and product mix enrichment.
However, growth in the Packaging & Printing Business was impacted due to sluggish demand conditions in the FMCG industry and exports.
Segment Results registered a healthy growth driven by product mix enrichment, higher realisation, strategic investments in imported pulp substitution and benefits of a cost-competitive fibre chain.
Capacity utilisation of the recently commissioned facilities, viz., Value Added Paperboard machine, Bleached Chemical Thermo Mechanical Pulp mill and Décor machine, was further ramped up during the quarter.
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