Up in smoke: Flat cigarette sales roil ITC, Q4 net profit down 1.3%

Meanwhile, the hotels segment saw record highs in revenue and profit, driven by strong average revenue growth from retail and marquee events.
Revenue also came in almost flat at Rs 17,752.87 crore for the period, growing 1.4 percent
Revenue also came in almost flat at Rs 17,752.87 crore for the period, growing 1.4 percent

MUMBAI: Roiled by stagnant cigarette volume, tobaccos-to-hotels major ITC on Thursday reported a fall in net profit to Rs 5,020 crore in the March quarter, 1.3 percent less than what it booked in the same period in the previous fiscal.

Revenue also came in almost flat at Rs 17,752.87 crore for the period, growing 1.4 percent over the corresponding period in the previous fiscal, the tobacco and FMCG major said in a regulatory filing.

Brokerages said the numbers are below expectations and the same was reflected in the stock movement, which inched by 35 bps to Rs 441.80 on a day when the indices rallied more than 1.6 percent to record highs.

Despite the poor set of numbers, the company which is also into FMCG and branded packaged food, paper products and luxury hotels, recommended a final dividend of Rs 7.50 for the financial year. Combined with the interim dividend of Rs 6.25 per share declared in January 2024, the total dividend for the year is Rs 13.75.

The FMCG segment performed well despite weak demand and rising competition from local players as it pursued growth through premiumisation, cost-management and strategic pricing. The segment's revenue grew 9.6 percent, with operating income rising 19.7 percent to Rs 2,338.50 crore, and operating margin improving by 94 bps to 11.2 percent.

When it come to the cash-cow cigarettes, after a period of sustained growth, the business saw volume consolidation due to subdued demand and high illicit trade. Premium offerings performed well, and increased costs from leaf tobacco prices and taxes were managed through improved product mix, cost management and pricing strategies. Trade marketing was restructured for better execution, the company said.

The company blamed the high taxes on legal cigarettes for the growth in illicit trade, making India the third largest illicit cigarette market globally. This has led to revenue loss, poor quality products, and a negative impact on tobacco farmers, the Kolkata based company said, adding however, recent tax stability has helped the legal industry regain some volume, boosting demand for domestic tobacco and reducing tax losses.

Meanwhile, the hotels segment saw record highs in revenue and profit, driven by strong average revenue growth from retail and marquee events. The segment saw a revenue of Rs 2,989.50 crore and earned an operating income of Rs 1,049.88 crore, up 15.6 percent and 26.2 percent on-year respectively.

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