FMCG major ITC Ltd on Thursday reported 10 per cent growth in net profit in the first quarter to nearly ₹2,385 crore against the same period last year.

The higher profit came on 8 per cent growth in income from operations to ₹13,253 crore. Sequentially, profits are down by 4.4 per cent compared to the January-March 2016 quarter.

Cigarettes subdued Cigarettes continues to be the mainstay of the business contributing 62 per cent of turnover, but nearly 82 per cent (₹3,004 crore) of the ₹3,675-crore profit before tax. Cigarettes contributed 83 per cent of PBT during the same period last year. Sequentially, the profit from the segment is marginally down.

“The performance of the cigarette business remained subdued. Over the last four years, the incidence of excise duty and VAT on cigarettes, at a per unit level, has gone up cumulatively by 118 per cent and 142 per cent, respectively, exerting severe pressure on legal industry volumes even as illegal trade grows unabated,” the company said.

Other FMCG business grew by over 9.5 per cent to ₹2,385 crore, in terms of revenue. But the growth apparently came at the cost of margins as the business posted ₹4.52 crore loss (gross).

The business made a loss of nearly ₹8 crore during the same period last year, but posted ₹71 crore profit in January-March quarter.

According to the company, FMCG-others recorded “continued improvement despite start-up cost of new categories and sustained investment in brand building.  The Branded Packaged Foods Businesses posted healthy growth led by Staples, Snacks and Noodles categories despite sluggish demand conditions. 

Agri & paper Pressure on margins is also evident on agri-business that posted 20 per cent growth in topline to ₹2,794 crore, but a mere 1.5 per cent growth in profit before tax as against the same period last year. The business, among other things, include trade of leaf tobacco.

The results, however, will look impressive if compared sequentially. As against the March quarter, the vertical posted nearly 39 per cent growth in PBT.

The topline growth was driven by wheat sales in domestic market and leaf tobacco exports, ITC clarified. Paperboards, paper and packaging business shrunk both in terms of top and bottomline. The PBT is down by 2.6 per cent to ₹248 crore against last year. Sequentially, profit from the segment was up by 22 per cent.

Hospitality sector In hotels, ITC posted a marginal ₹1.22 crore profit against ₹7.25 crore loss last year. The company posted nearly ₹43 crore profit from hotels business in the March quarter.

The hospitality sector continues to be adversely impacted by a weak demand and pricing scenario against the backdrop of excessive room inventory in key domestic markets and sluggish macroeconomic environment, ITC said.

The company’s scrip closed flat at ₹250.65 against previous day’s closing of ₹250.80 on the BSE.

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