ITC beats Street, Q3 net up 22% at Rs 1,700 crore - The Financial Express
Jan 21, 2012
A marked improvement in operating margins, price hikes in cigarettes and growth in revenues of the non-cigarette FMCG business helped ITC post better-than-expected third-quarter profits of 22% to Rs 1,700 crore on Friday against Rs1,389 crore in the same period a year ago.
For the quarter, net turnover grew 14% to Rs 6,195 crore riding on branded packaged foods, personal care, agri and cigarettes business.
According to analysts, the operating margins improved by 124 basis points and that helped it get good numbers despite the negative sentiment on consumer goods.
Kaustubh Pawaskar, analyst with Sharekhan, said that the price hikes in cigarettes, which ITC usually does pre-Budget, also helped improving profitability.
ITC's net revenues from the FMCG business, including cigarettes, grew 18.8% to Rs 4,604 crore from Rs 3,875 crore a year ago in the same period. The non-cigarette FMCG segment showed revenue growth of 25% during the quarter to Rs 1,375 crore.
A company press release said the branded packaged foods business continued to grow rapidly driven by higher volumes and improved profitability. The value-added and premium variants of Sunfeast biscuits continued to gain consumer franchise, the release said.
In the cigarettes business, the launch of new brands and variants during the quarter, including Players and Hero, helped ITC improve overall market share. Analysts said that after a series of price hikes, ITC's cigarette business will be on course to perform well if it can have a 5-6% volume growth. But according to reports, volume growth in the first half was down to 4-5%.
During the quarter, the hotel industry was hit by the slowdown in the US and Europe and India. Not surprisingly, net revenues for the quarter was marginally down from Rs 282 crore in the corresponding period last year to Rs 279 crore now.
A company release said with a lower level of demand and significant additions to supply in key markets, the hospitality industry is going through a challenging period. But it said the company was taking a long-term view on the industry and that the setting up of luxury properties in Chennai and Kolkata and a golf resort near Gurgaon was on track.
ITC is also in the process of investing in land for a luxury hotel property in Colombo. The depreciation of the rupee helped its agri business to post profits of 10% in the quarter.
