Tobacco drags ITC in Q1; food, hygiene help
1 min read . Updated: 24 Jul 2020, 11:23 PM ISTNet profit fell to ₹2,342.76 crore in the three months to June from ₹3,173.94 crore a year ago, ITC said in a filing to the stock exchanges on Friday
ITC Ltd, India’s largest cigarette maker, posted a 26% drop in fiscal first quarter profit as the prolonged lockdown hurt its cigarette and hotel businesses.
However, the maker of Aashirvaad atta and Savlon disinfectants benefited from demand for hygiene products and consumers stocking up on flour, noodles and biscuits during the lockdown.
Net profit fell to ₹2,342.76 crore in the three months to June from ₹3,173.94 crore a year ago, ITC said in a filing to the stock exchanges on Friday.
That compares with the ₹2,129.50 crore profit estimate in a Bloomberg survey of 15 analysts. Estimates pegged the company’s revenue for the quarter at ₹8,106.20 crore.
Revenue from operations dropped 17.4% to ₹9,501.75 crore from ₹11,502 crore in the year earlier.
ITC said all other segments barring hotels have seen a “progressive normalization" in the latter part of the first quarter. However, concerns around localized lockdowns remain, it said.
“The recent imposition of localized lockdowns in several parts of the country, however, are posing operational challenges and impacting the recovery momentum. The company shall continue to closely monitor the situation and respond with agility to strengthen its market standing while sharply focusing on cost reduction measures," it said in a press release.
The lockdown impacted cigarette volumes across April as supplies remained restricted from its factories; May saw some recovery and June reached the pre-covid-19 level, Edelweiss Securities said in a report earlier this month.
Cigarette revenues fell 29% to ₹3,853.79 crore.
“ITC cigarette volume dip in Q1FY21 of 40% year-on-year versus our expectation of 50% dip. They would have gained some share from competitors whose factory was closed in Q1FY21," said Abneesh Roy, executive vice-president research, Edelweiss Securities.
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