ITC Q4 Results: Lower Corporate Tax Boosts Profit Even As Sales Decline
Bingo wafers, made by ITC Ltd., sit for sale at a shop in Mumbai. (Photographer: Adeel Halim/Bloomberg News)

ITC Q4 Results: Lower Corporate Tax Boosts Profit Even As Sales Decline

ITC Ltd.’s quarterly profit rose on lower corporate tax rates even as revenue declined across businesses during the period when the Covid-19 outbreak disrupted trade.

Net profit rose 9.1% year-on-year to Rs 3,798 crore in the quarter ended March, the cigarettes-to-consumer goods maker said in an exchange filing. That compares with the Rs 3,511-crore consensus estimate of analysts tracked by Bloomberg.

The owner of Aashirvaad and Sunfeast brands saw revenue decline 6.4% over the year-ago period to Rs 11,420 crore. Analysts had pegged the metric at Rs 11,832 crore.

  • Cigarette revenue fell 6.5% year-on-year to Rs 5,130 crore.
  • Revenue of the remaining FMCG business declined 2.7% to Rs 3,184 crore.
  • For hotels, it dropped 8.6% to Rs 466 crore.
  • Agri-business revenue fell 10.2% to Rs 1,887 crore.
  • Paperboards segment revenue declined 5.1% to Rs 1,459 crore.

India’s consumer goods makers were battling the worst consumption slowdown in more than a decade even before the pandemic struck. While the lockdown starting March 25 completely stalled economic activity barring essential services, states had started imposing restrictions to contain the pandemic even before that. Value growth of consumer goods companies, according to Nielsen India, fell to its lowest in at least seven quarters. Hindustan Unilever Ltd. and Dabur India Ltd., too, saw a contraction in volumes in the fourth quarter.

ITC’s operating profit fell 8.9% year-on-year to Rs 4,163 crore. Operating margin stood at 36.5% compared to 37.5 percent in the year-ago quarter.

The company was among the fastest to resume operations after obtaining necessary permissions during the lockdown, ITC said in a statement. The company has significantly ramped up it capacity to meet the surge in demand for essential items.

“While essential consumer goods have witnessed buoyancy in demand, discretionary categories is likely to recover over time,” the maker of Bingo chips said. “The company is approaching the future with due caution in light of the heightened uncertainty in the environment.”

Shares of ITC closed 3.1% lower on Friday before the results were announced. That compares with a 0.9% rise in the benchmark Nifty 50 Index.

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