ITC Ltd has maintained a healthy bottomline in a challenging environment with a 21.5% growth in net profit in the second quarter of 2013-14. The tobacco-to-FMCG-to-hotel major has posted a net profit of Rs 2,230 crore against Rs 1,836 crore in the year-ago period largely owing to strong performance of tobacco, paperboard and agro business.
The new FMCG business continues to reduce losses from Rs 30 crore to Rs 12 crore. However, the hotel segment remained an underperformer with a fall in profit to Rs 6.72 crore from Rs 15 crore owing to economic downturn. The net revenue growth during Q2 stood at 15.2% to Rs 7,862 crore driven by branded foods businesses, paperboards and leaf tobacco exports.
According to officials, the snack foods business recorded a strong growth during the quarter. The potato chips range — relaunched under the ‘Yumitos’ sub-brand earlier this year — received an encouraging response. It pointed out that in the personal care product front the ‘Engage’ range of deodorants, launched in April 2013, continued to garner increasing consumer franchise during the quarter.
Commenting on the lack-luster performance of the hospitality division, an official said the hospitality sector continued to be adversely impacted by weak economic conditions prevailing in major international source markets and India on the one hand, and significant additions to room supplies in key cities on the other. “While segment revenues grew by a robust 13.8% during the quarter driven by ITC Grand Chola, which commenced operations in September 2012, profitability was impacted by a relatively weak pricing scenario prevailing in the industry and gestation costs of the new property,” officials added.
The paperboards, paper and packaging segment recorded a growth of 11.7% in revenues during the quarter driven by a strong growth in paperboards and flexible packaging. Segment results for the quarter were, however, impacted by the steep rise in input costs — particularly of wood and coal.