ITC Q2 net profit rises 2% to ₹4,993 crore

Subdued demand conditions, unusually heavy rains, high food inflation, sharp escalation in input costs impacted performance

ITC Ltd. reported 2% growth in consolidated net profit to ₹4,993 crore for the second quarter ended September 30, from ₹4,898 crore in the year-earlier period, indicating a challenging operating environment.

Consolidated revenue from operations increased 15.62% to ₹22,127.59 crore as compared with ₹19,137.51 crore in the same period last year driven by agri business and hotels.

On a standalone basis, the company reported 3% growth in net profit at ₹5,078 crore over the year-earlier period.

“Subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs such as leaf and wood [was] witnessed during the quarter,” the company said.

 The company’s FMCG segment revenue grew 5.4% YoY to ₹5,578 crore and staples, biscuits, snacks, frozen snacks, dairy, premium soaps, homecare and agarbatti drove growth. 

The notebooks segment was impacted by high base effect and “opportunistic play” by local brands which was led by a sharp decline in paper prices. 

Revenue from the cigarettes segment was rose 7.3% YoY and profit before interest and tax (PBIT) was up 5.1% YoY. Differentiated and premium offerings performed well and this segment witnessed severe cost escalation in leaf tobacco partially mitigated through improved mix, strategic cost management and calibrated pricing actions, the company said.

The hotels segment delivered strong performance on a high base. This segment’s revenue was up 12.1% YoY and PBIT was up 20.2% YoY. Food and beverages, and retail and wedding segments drove growth.

The National Company Law Tribunal, Kolkata Bench, on October 4, sanctioned the demerger of the hotels business from the company. The certified copy of the order is awaited. “The scheme will be effective on the first day of the following month after filing of certified copy of the aforesaid NCLT order with the Registrar of Companies, West Bengal, and fulfilling other conditions and matters referred to in the scheme,” the company said.

ITC said its board has approved consolidation of its shareholding in rival hospitality chains Oberoi and Leela by acquiring shares from a wholly-owned arm, Russell Credit Ltd.

The agri business segment revenue rose 47% YoY led by leaf tobacco and value added agri products. PBIT up 27.5% YoY. Paperboards, paper and packaging segment remains impacted due to low priced Chinese supplies in global markets including India, soft domestic demand conditions and unprecedented surge in wood prices, the company said.

The board approved acquisition of 1 ,52,32, 129 equity shares of ₹2 each of EIH Ltd. and 34,60,829 shares of ₹21 each of HLV Ltd. from Russell Credit Ltd. (RCL), its wholly owned subsidiary, at their respective book value, to consolidate shareholding of EIH and HLV under ITC. 

Post such acquisition, the total share holding of ITC in EIH and HLV would be 16.13% and 8.11% respectively.

The board also approved acquisition from RCL of the entire share capital (comprising 4,20,60,166 equity shares of ₹10 each) of Greenacre Holdings Limited, an unlisted company and a wholly owned subsidiary of RCL, at book value.

Published - October 24, 2024 09:52 pm IST