India's ITC Beats Forecast on Higher Premium Prices

Source from:  Reuters 07/28/2009

ITC Ltd (ITC.BO: Quote, Profile, Research) on Thursday beat market forecasts with a 17.4 percent rise in net profit for the June quarter after India's top cigarette maker increased premium prices, but its hotel business was affected by falling travel. While the cigarettes business was the biggest contributor to profits, ITC said revenues were hit by an increase in value-added tax on cigarettes in some states, including Maharashtra in western India, to 20 percent from 12.5 percent. Export of leaf tobacco also helped profit rise, it said. ITC, 31.7 percent owned by British American Tobacco (BATS.L: Quote, Profile, Research) reported a net profit of 8.79 billion rupees on net sales of 40.83 billion rupees in the June quarter. That bettered a average forecast of 8.47 billion rupees net profit on revenues of 41.23 billion rupees in a Reuters poll of 11 brokerages. "The hotels business will take some time to recover because the tourism and travel sector is not doing well. However the agri-business should improve further. I expect an improvement in growth next quarter," said Vanmala Nagwekar, analyst with India Infoline. A downturn in corporate and leisure travel, especially international travellers hit by the global slowdown, was lowering occupancy levels and average room rates in the hotel business. ITC said lower output of soya and wheat hit revenue in its agri-business, but said a restructuring of products had helped improve profitability. Its non-cigarette consumer goods business, consisting of branded packaged foods, apparel retailing and personal care products, grew 9.5 percent as ITC increased its focus on the sector. Shares in ITC, worth $17.1 billion, rose 5.6 percent to 229.95 rupees, while the main index .BSESN rose 2.6 percent. Enditem