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Despite strong revenues from its non-cigarette FMCG business, diversified conglomerate, ITC Ltd, saw a 26 per cent dip in net profit to ₹2,343 crore for the first quarter ended June 30, 2020. Net profit in the year-ago period stood at ₹3,174 crore.
Gross revenue from sale of products and services, during the quarter under review, saw a 17 per cent year-on-year dip to ₹9,436 crore from ₹11,361 crore in the year-ago-period.
Cigarette sales and a slowdown in revenues from the hotels segment impacted quarter results. Paper, paperboards and packaging and the education and stationery business were also hit during the quarter.
“Other than the hotels segment, progressive normalisation was witnessed in the later part of the first quarter across all operating segments. The recent imposition of localised lockdowns in several parts of the country, however, are posing operational challenges and impacting the recovery momentum,” the company said in a media statement.
Non-cigarette FMCG biz
The FMCG – others, which include branded food, staples, ready-to-cook, agarbatties, personal care, educational and stationery products, saw an over 10 per cent jump in revenues YoY to ₹3,375 crore for Q1FY21. It stood at ₹3,061 crore in the year-ago-period.
Segment EBITDA was up 42.4 per cent to ₹257 crore notwithstanding incremental costs due to Covid-19, gestation and start-up costs of new categories.
According to company statement, staples, convenience foods and health & hygiene products, representing around 75 per cent of the portfolio, saw a 34 per cent growth.
The FMCG-others witnessed a near 19 per cent YoY growth, excluding education and stationery products.
“Discretionary categories and those with higher ‘out-of-home’ consumption salience de-grew by 25 per cent, but are witnessing progressive normalisation with improved growth momentum. The education and stationery products category remained impacted due to deferment of academic session across the country,” it said.
Cigarette volumes decline
A report by Edeleweiss Secutities said cigarette volumes has seen a 40 per cent dip YoY, but, have gained market share from competition whose units were closed in Q1FY21. Revenues from cigarette sales declined by 30 per cent to ₹3854 crore for June quarter (₹5,433 crore).
Incidentally, cigarette sales were hit during the lockdown.
The production was allowed only from mid-May and the supply started coming into the market from May-end. Currently, all factories are operational and production has been scaled up to pre-Covid levels.
“Unprecedented disruption was witnessed across the value chain with manufacturing and selling & distribution operations being severely restricted following the imposition of lockdown. The sales and distribution operations have largely normalised,” ITC said.
Hotels also saw a 94 per cent dip in revenues with EBIT losses being in the range of ₹243 crore.
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