ITC Posts Record Quarterly Profit as Tobacco, Paper Sales Rise

Source from:  Bloomberg 01/25/2010

ITC Ltd., Asia's second-largest tobacco company by market value, posted a record quarterly profit as cigarette sales rose and its paper and agriculture businesses almost doubled earnings. Net income climbed 27 percent to 11.4 billion rupees ($247 million) in the three months ended Dec. 31, from 9.03 billion rupees a year earlier, Kolkata-based ITC said in an e-mailed statement today. That compares with the 10.7 billion rupee median estimate of nine analysts compiled by Bloomberg. The fastest pace of earnings growth in three years helped the company's shares gain as much as 3.8 percent today, the biggest jump in two months. Accelerating growth in the $1.2 trillion economy is boosting income for residents of the world's second-most populous nation and increasing demand for ITC's Goldflake and Wills cigarette brands and Fiama di Wills shampoos. "Cigarette volume growth has been very impressive because of the lack of increase in taxes in the budget," said Abhijeet Kundu, an analyst at Antique Stock Broking Ltd. in Mumbai, who has a "buy" recommendation on the stock. "The performance in hotels has improved" and cigarette volume growth is expected to continue this quarter, he said. The cigarette maker's shares rose 2.8 percent to 251.35 rupees at 2:57 p.m. in Mumbai trading, valuing the company at $20.7 billion. ITC, 32 percent owned by British American Tobacco Plc, climbed 46 percent last year, trailing the 81 percent gain in the benchmark Sensex. Japan Tobacco Inc. is Asia's most- valuable cigarette maker, with a market worth of $36 billion. Cigarette sales rose 17 percent to 23.3 billion rupees in the third quarter. Profit before taxes and one-time gains increased 15 percent to 13.1 billion rupees. India's government has imposed a nationwide ban on smoking in public places including office buildings, restaurants and pubs in October 2008 to prevent smoking-related diseases. [b]Tobacco Deaths[/b] Tobacco use may cause about 1 million deaths a year in India this year unless steps are taken to encourage more people to shed the habit, said Prabhat Jha, a researcher at the Toronto-based Centre for Global Health Research. The company said the losses incurred in the new businesses that includes garments, greeting cards, incense sticks and food narrowed to 860.3 million rupees from 1.27 billion rupees a year earlier. Revenue rose 24 percent to 8.9 billion rupees. ITC's total sales in the third quarter rose 18 percent to 45.3 billion rupees. Analysts expected 43.9 billion rupees. ITC's other income, which includes financial investments, rose 63 percent to 1.59 billion rupees. Revenue from ITC's hotel business rose for the first time in five quarters since the terrorist attacks in Mumbai in November 2008. Sales rose 0.2 percent to 2.48 billion rupees. Profit before taxes and interest fell to 762.9 million rupees. Sales at its paper business gained 29 percent to 8.12 billion rupees in the quarter. Profit before taxes and interest added 81 percent to 2.01 billion rupees. Enditem