ITC 's second quarter net profit surged a better than expected 21.5% year-on-year at Rs 1,514.31 crore, helped by strong sales, especially in cigarettes and other FMCG business. Lower losses in the other FMCG business also boosted overall earnings.
The cigarettes to hotels to FMCG major said net sales for the July-September quarter rose 17.5% from a year ago at Rs 5,974.18 crore.
Analysts on average had expected a net profit of Rs 1,470 crore on revenue of Rs 5,945 crore, according to a CNBC-TV18 poll.
Overall operating margins for the company were at 35.28% in July-September, compared with 35.35% earlier.
ITC's total expenses during the quarter rose near 17% from a year ago at Rs 4,036.38 crore.
While there was strong growth across most segments, net sales in ITC's hotels division rose just 1% at Rs 211.14 crore as second quarter is seasonally a weak quarter for the hotel industry. Hotel segment profit was up 9% at Rs 43.44 crore.
The continued economic turmoil in US and Europe, the two key source markets, and the slowdown in Indian economy also hurt the hospitality industry, the company said.
"With a lower level of demand on one hand and significant additions to supply in key markets on the other, the hospitality industry in India is witnessing a challenging period," ITC said.
The company, though, maintains positive long-term outlook for the Indian hotel industry and said several new projects including joint ventures and management contracts are on the anvil to rapidly scale up the business.
Construction of new super luxury hotels in Chennai, Kolkata and Classic Golf Resort near Gurgaon are progressing satisfactorily, ITC said.
Meanwhile, net sales of cigarettes, ITC’s bread and butter, rose over 16% at Rs 2,968.14 crore in the three-month period. Other FMCG sales jumped 27% year-on-year at Rs 1,340.66 crore, it said Monday.
The quarter also saw losses in the company’s other (non-cigarette) FMCG business decline 16% at Rs 55.90 crore.
Amongst ITC’s other divisions, agri business net sales rose near 13% year-on-year at Rs 1,434.54 crore. Agri business profit was up 15% from a year ago to Rs 238.8 crore.
"This impressive performance (in agri business) was primarily driven by higher trading volumes and improved realisations in soya, wheat and coffee," ITC said.
Paper, paperboards and packaging division net sales were up 9.4% at Rs 1,005.42 crore in the second quarter, while segment profit rose 18% from a year ago at Rs 289.70 crore.
While the packaging and printing business continues to provide strategic sourcing support to cigarettes, foods and personal care businesses, sales to external sales also saw "robust" growth, ITC said.
The company is making significant investments in new technologies to cater to growing demand for value-added packaging among consumer electronics and FMCG companies.
ITC shares closed up 1.4% at Rs 206.95 on NSE on Monday.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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