ITC Q3 net up 16% at Rs 830 Crore

Source from:  economictimes.indiatimes.com 19 Jan, 2008, 0047 01/21/2008

KOLKATA: Tobacco and hotels major ITC on Friday reported a 16% Y-o-Y growth in net profit for the third quarter (Q3) ended December '07 to Rs 830 crore. Net sales during the period grew by 13% to 3,595.4 crore, driven by 50% growth in revenues from the newer non-tobacco FMCG businesses such as packaged foods, lifestyle retailing and stationery. In a statement issued after the board meeting, ITC said that revenue growth from newer FMCG businesses coupled with healthy increases in revenues from the hotels, paperboards & packaging businesses mitigated the muted growth in the cigarette business. Earnings per share for the quarter stood at Rs 2.21, the company release stated. A high double-digit earning in Q3 came in the backdrop of a poor performance registered in the second quarter. Profit growth was, however, adversely affected due to the product development expenses in case of Fiama Di Wills, Superia and Bingo. During the quarter, the company launched shampoos and shower gels under Fiama Di Wills brand. New launches led to 40% expansion in losses of non-tobacco FMCG business to Rs 64.5 crore. The company's cigarette business, which constitutes nearly half of ITC's net revenue, registered 11% revenue growth over the last quarter. Tobacco business was adversely affected by the imposition of VAT, central sales tax as applicable and trade Tax in UP. Consequently, the company was subject to additional indirect taxation amounting to Rs 436 crore and Rs 1,228 crore for the quarter and nine months ended December '07 respectively. The company's revenues from this business will further suffer if and when the regulation of printing pictorial health warnings on tobacco product will be enforced. Commenting on the overall performance, Angel Broking's FMCG analyst Anand Shah said, "Top line growth was below expectations as price hike put pressure on volumes. Bottom line growth was aided by higher other income. Interestingly, margins have improved across products though we had expected some fall." The company's paper business regained its growth trajectory with revenues improving by 11% during the quarter under review. "This was driven by a 14% improvement in volumes of the value-added portfolio of paper and paperboards and robust performance of the packaging business," the company statement stated. The company's revenues from agri business suffered a 9% fall over the last quarter. The company attributes this to the drop in exports following the restriction in export of non-basmati rice. Despite this, the segment registered 28% YoY increase in profit before taxes on back of record exports of leaf tobacco. Value-added packaging has helped the company achieve good volume growth in the paper business. With a new pulp mill slated for commissioning by the last quarter of this fiscal, the paper business of ITC is likely to receive further boost. Revenues of the company's hotel division was up by 10% while PBT profit before taxes grew by 16% on the back of improvement in average room realisation rates. ITC's diversified business portfolio has always helped it to slide over any down cycle of one sector with the help of strengths in other businesses. If the company is able to sustain this growth momentum across its various business verticals, the results of the last quarter are also likely to be even more encouraging. Enditem