ITC Q4 net rises over 12% to Rs2,669 crore

ITC Ltd, diversified consumer goods company and the country's largest cigarette manufacturer, has reported a 12.13 per cent increase in its standalone net profit for fiscal fourth quarter at Rs2,669.47 crore against Rs2,380.68 crore in the year-ago quarter.

Revenue from operation during the January-March 2017 quarter rose 6.15 per cent year-on-year to Rs15,008.82 crore from Rs14,138.78 crore during the year-ago period.

ITC said while there was a modest recovery in performance during the March quarter after severe disruption in operations in the December quarter last fiscal due to currency crunch post demonetisation, wholesale channel and rural markets remained sluggish.

While cigarette revenue grew 4.79 per cent y-o-y to Rs8,954.94 crore during the January-March quarter, revenue from other FMCG business grew 6.45 per cent to Rs2,885.76 crore, the company said in a BSE filing.

However, operating profit from the cigarette business increased by close to 8 per cent year-on-year to Rs3,258.76 crore during the quarter.

Consolidated revenue growth in this segment for FY17, however, surpassed the growth in Q4 by 0.5 per cent with the net income from this sector standing at Rs35,877.66 crore in FY17, against revenue of Rs34,062.67 crore in FY16.

Except for than cigarattes, FMCG business posted a negative growth of more than 29 per cent in operating profit to Rs55.56 crore during March quarter against Rs78.60 crore in the corresponding period of the previous fiscal.

On a consolidated basis, the decline in this segment's profitability for the quarter was the sharpest 70.52 per cent at Rs26.15 crore. But, the top line grew 8.10 per cent to Rs10,537.46 crore for the full financial year.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) during the quarter increased by 7.5 per cent to Rs3,875 crore.

The company said despite extremely challenging operating environment, it retained its leadership position in the cigarette industry and improved its standing in key competitive markets across the country. ''This demonstrates the resilience of the company's strong portfolio of brands, superior execution of competitive strategies, relentless focus on value creation through innovation and deep consumer insights,'' an ITC release said, adding some of the strategic initiatives during the year include the launch of Gold Flake Kings Blue Tropical Switch, Classic Citric Burst and Classic Tangy Burst, among others.

ITC said the FMCG industry witnessed further deceleration in growth rate during the last financial year with demand conditions remaining subdued for the fourth successive year. ''The much anticipated pick-up in consumption expenditure on the back of good monsoons in 2016, low inflation and implementation of the recommendations of the 7th Pay Commission did not play out fully. The incipient recovery in demand witnessed around the middle of the year was adversely impacted by the cash crunch especially during the third quarter. Further, the industry had to contend with sharp escalation in the cost of major commodities in the midst of heightened competitive intensity, leading to compression in margins,'' it added.

The company said operating environment in the hospitality sector remained challenging during the year. ''While second half initially indicated signs of pick-up in the hotels industry, collateral impact on the economy on account of currency crunch limited the recovery. Segment revenue recorded a growth of 4.3 per cent during the year driven by improvement in average room rates and higher food and beverage sales,'' it informed.

On a consolidated basis the segment's profitability for the fiscal 2016-17 stood at Rs117.12 crore, which translates into a 90.09 per cent increase over FY16. The top line increased 6.48 per cent to Rs386.52 crore in Q4, while the increase was 4.20 per cent at Rs1,414.39  crore for the whole of FY17.

On Friday, ITC's scrip rose 2.99 per cent to end the day at Rs308.65 on the BSE. The company announced the results during normal market hours.

The performance of paperboards, paper and packaging segment continued to be impacted by sluggish demand in the FMCG and legal cigarette industry. Zero-duty imports under Asean Free Trade Agreement, cheap imports from China along with capacity ramp-up by other industry players adversely impacted this segment's revenues in Q4.

The segment's results, however, improved on the back of benign input costs and improved mix. In Q4, this segment recorded a 4.39 per cent topline growth at Rs1,372.73 crore while its profitability increased by 18.34 per cent at Rs240.17 crore.

For FY17, the top line grew just 0.6 per cent at Rs5,362.86 crore.

Agri-commodities, branded packaged foods and personal care products business recorded, with strong growth in the staples (led by Aashirvaad atta and Bingo), biscuits, noodles and personal care products. Education and stationery and apparel were amongst the worst hit. This led to heavy discounting in apparel and ''rebalancing of inventory pipelines''.