ITC Ltd has registered 20 per cent rise in net profit in the first quarter of this fiscal against the same period last year. Higher profits came on the back of growth in both cigarette and non-cigarette FMCG segments.
Sequentially, however, there was a marginal drop in net profit from Rs 1,614 crore during the quarter ended March 31, 2012. Profits are on a decline from January-March 2012.
Mr V. Srinivasan, research analyst – Angel Broking, attributes the trend to a mixture of reasons including impact of slowdown in hotels business and seasonal impact in categories. However, he is expecting the company to retain the operating profit margin at the current level of 34.7 per cent in the July-September quarter.
Cigarette sales up
According to a company release, cigarette sales increased by 15 per cent during April-June 2012. The operating profit of the division grew by 13 per cent to Rs 1,900 crore. Price hike, analysts point out, was a major contributor to the growth of business during the quarter.
FMCG
During the last quarter, non-cigarette FMCG business grew by 23 per cent. Though the operating losses of non-cigarette FMCG business came down on a year-on-year basis, however, sequentially the losses have increased. “This is mainly because of the company’s investment in various brands thereby, incurring higher expenditure,” says Mr Srinivasan.
Agri revenue subdued
Revenues from agri business were subdued due to the surplus leaf tobacco inventory and the prevailing adverse commodity price parities, ITC claimed.
The company, through its subsidiary – WelcomHotels Lanka Private Ltd - has acquired land in Colombo to develop a super-luxury property. The land was acquired on lease from the Sri Lankan Government.
The shares of ITC closed at Rs 249.45, down by 2.02 per cent on the BSE on Thursday.