ITC first quarter profit rises 10%

Tobacco-to-hotels conglomerate ITC reported better-than-expected profit for the June quarter despite a fall in its cigarettes segment.

At ₹2,818.7 crore, the Kolkata-headquartered company’s profit registered a 10% rise compared to ₹ 2,560.5 crore, last year.

A Reuters poll of analysts had projected that the company will post a profit of ₹2,792 crore.

However, the company's top-line dropped 22% to ₹10,722.2 crore from ₹13,722.2 crore, in the same period last year. Given that indirect taxes were restructured with the launch of GST on July 1 last year, ITC provided a detailed break-up of the gross sales value (GSV) which stood at ₹18,171.7 crore after adjusting for the accounting impact post-GST. The comparable figure for the quarter-ended June 2017 was ₹16,010.7 crore.

The latest quarter saw revenue from the cigarettes business fall by 41.6% to ₹5,127.6 crore compared to ₹ 8,774.2 crore, last year. Cigarettes contributed the highest to ITC's revenue–47.8% in this quarter.

Despite the double-digit fall in ITC's cigarettes' segment revenue, the segment's profit before tax registered a marginal 1.8% increase compared to the year before.

While the company is yet to spell-out the reasons for the revenue fall in the latest quarter, it is important to note that ITC posted a similar–44% revenue decline in March 2018, and attributed it to stringent regulatory environment and shortage of tobacco leaf in Andhra Pradesh.

The diversified conglomerate saw a 11.9% increase in its hotel business revenue to ₹ 341.3 crore, and the segment's profit before tax jumped one and a half times to ₹13.2 crore. ITC's agri business, which is its second largest revenue generator, registered a 14.2% rise to ₹ 3,151.3 crore, while profit before tax declined by 17.3% to ₹194.5 crore.