While most FMCG companies struggled to match profit growth to their sales, ITC managed this in the recent March quarter, through pre-emptive price hikes on cigarettes and lower losses on the other FMCGs. The company's fourth quarter saw profits rise at 25 per cent, while sales rose by 16 per cent.

In the cigarette business, the company hiked prices in anticipation of the ‘ritual' excise duty hikes in the annual budget. However, the Finance Ministry's decision to leave the rates unchanged meant ITC's margins received a lift. This greatly helped its cause during the fourth quarter even as cigarette sales volumes slipped, with gross sales expanding 13 per cent as operating profits grew by a healthy 17 per cent. Competition, as in the past, has done little to dent market share or profitability of the cigarette major.

For the full year, the FMCG business made greater headway in trimming down losses, even as it registered strong sales growth. The company's food and personal care products (Sunfeast and Fiama Di Wills) saw sales growth of 23 per cent while operating losses for the year came in at Rs 331.5 crore compared with Rs 380 crore during the previous fiscal.

Despite the rising contribution from the FMCG business to sales, tobacco remains the main contributor to ITC's bottomline, accounting for 80 per cent of operating profits. The company's other businesses such as hotels, agri-trading and paperboards (including branded notebooks) also fared well for the year. They registered operating profit growth of between 20 per cent in the paperboard segment and 30 per cent in the volatile agri-trading business. Hotels saw annual operating profits grow by 22.5 per cent on improving occupancy rates.

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