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Backed by an all-round growth in sales across various segments, ITC Ltd posted 21 per cent rise in net profit to Rs 1,514 crore for the quarter ended September 30, 2011, against the corresponding period last year. Net sales grew by about 18 per cent to Rs 5,974 crore, said a company statement.
On a sequential basis, the net profit rose by about 14 per cent from Rs 1,333 crore in the first quarter of this fiscal.
The shares of ITC rose by 1.60 per cent to close at Rs 206.90 on the BSE on Monday.
Cigarette
Despite 16 per cent growth in revenues in its cigarettes business, the gross EBIT [earnings before interest, taxes] margins from the segment remained subdued.
The company recently hiked prices of its Navy Cut and Classic brands by close to 10 per cent. “The price hike boosted the net EBIT margins by about 100 basis points, however, the gross margins is down by 74 basis points as the hike is not in tandem with the increase in duties and taxes. Therefore, we can expect further hike in prices,” said Mr Sreekanth, research analyst, media and FMCG, Angel Broking.
FMCG
The losses in the non-cigarette FMCG business came down to Rs 56 crore (Rs 67 crore). “The segment has been doing well; the company has undertaken a huge product expansion plan which is eating into their profits. However, it might break even by the end of fiscal 2013,” Mr Sreekanth said.
The overall net EBIT margins were marginally up by 11 basis points. The company had managed to post a marginal growth in margins by reducing staff costs and other expenditures against increase in raw material prices, he pointed out.
Driven by higher trading volumes and improved realisations in soya, wheat and coffee, the income from agri business division grew by 13 per cent.
Meltdown impacts
The economic turmoil in Europe and the US – the two key source markets – and the slowdown of the Indian economy had an adverse impact on the hotels business. “With a lower level of demand, on one hand, and significant additions to supply in key markets on the other, the hospitality industry in the country is witnessing a challenging period,” the release said.
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