ITC's July-September quarter earnings missed analysts' expectations on Friday with profit flat Rs 2,431 crore and revenue falling over 1 percent to Rs 8,904 crore year-on-year.
Cigartte-to-hotel-FMCG major ITC's July-September quarter earnings missed analysts' expectations on Friday with profit rising to Rs 2,431 crore from Rs 2,425 crore in year-ago period, impacted by slow revenue growth in cigarette business. Weak revenue growth in agri business, hotels and paper business also hurt bottomline. Strong margin expansion and other income helped profit rise marginally.
Revenue fell 1.4 percent to Rs 8,904 crore compared to Rs 9,024 crore in same period.
"Performance during the quarter remained subdued reflecting unprecedented pressure on legal cigarette industry volumes, lack of trading opportunities in agri-commodities and sluggish demand environment prevailing in FMCG industry coupled with prolonged disruption in the Instant Noodles category due to regulatory challenges," the company says.
According to analysts polled by CNBC-TV18, profit was estimated at Rs 2,550 crore (up 5 percent) and revenue of Rs 9,420 crore (up 4.3 percent) with operating profit rising 5.3 percent to Rs 3,675 crore and margin expansion of 30 basis points.
Operating profit increased 2 percent year-on-year to Rs 3,560 crore and margin expanded by 130 basis points to 40 percent in quarter gone by. Margin expansion was led by cigarette business (that contributes 48 percent to total revenue) & agri business (contributes over 20 percent to revenue), and also boosted by lower raw material cost.
Cigarette revenue was up 1.6 percent to Rs 4,317.2 crore with its EBIT (earnings before interest and tax) rising 3 percent to Rs 2,969 crore and margin expansion of 100 basis points to 68.8 percent in quarter ended September 2015.
Cigarette business was impacted by unprecedented pressure on legal cigarette industry volumes, says the company, adding underlying revenue growth in FMCG others was at 10 percent approximately, excluding instant noodles category.
FMCG others business (which includes packaged foods, dairy products, apparel, stationery etc) has shown 7 percent growth during the quarter at Rs 2,351.6 crore
with EBIT loss of Rs 11.10 crore (against loss Rs 10.31 crore) on yearly basis.
Agri business revenue fell 10 percent year-on-year to Rs 1,844 crore with EBIT down 1.4 percent at Rs 293.94 crore and margin expansion of 140 basis points at 15.9 percent in quarter ended September 2015. It was impacted by lack of trading opportunities in wheat, coffee and soya.
Revenue from its hotels business rose 11 percent to Rs 290 crore, driven by strong growth in room occupancy and food & beverage revenue. EBIT loss declined to Rs 5.5 crore from Rs 9.6 crore compared to year-ago period.
Paper business revenue also declined 2.3 percent in same period to Rs 1,254 crore with EBIT down 13.6 percent and margin contraction of 210 basis points. It was impacted by the continuing slowdown in the FMCG & cigarette industry, reduction of import duty under various regional Free Trade Agreements and cheap imports from China, says the company.
Raw material cost slipped 3.6 percent year-on-year to Rs 2,691.5 crore while tax expenses increased 8.7 percent to Rs 1,259 crore. Other income climbed 12 percent to Rs 399.2 crore in same period.
At 13:40 hours IST, the scrip of ITC was quoting at Rs 334.50, down Rs 15.25, or 4.36 percent amid high volumes on the BSE.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.