INDIA: Food boosts Q3 sales at ITC

By Hannah Abdulla | 20 January 2014

Indian conglomerate ITC said "robust" growth from its packaged food business helped it post a 13% jump in quarterly sales.

The Kolkota-based company saw group sales hit INR122.23bn (US$1.99bn) for the three months to the end of December, its third quarter.

Pre-tax profits and net profit both increased to 16.3% to INR34.4bn and INR23.85bn respectively.

In its statement announcing the results, the company said its branded packaged foods businesses "posted robust growth in revenues and enhanced market standing across categories by leveraging a portfolio of differentiated and innovative products."

In the bakery and confectionery foods business, the recently launched Sunfeast Delishus gourmet cookies and Candyman Jellicious in the jelly segment were extended to target markets and garnered increasing consumer franchise. 
The snack foods business recorded strong growth during the quarter with the recently launched region-specific variants gaining traction with consumers.

In the instant noodles category, 'Sunfeast Yippee!' grew at a rapid pace gaining consumer franchise. During the quarter, the business also launched a highly innovative tricolour pasta format in two variants which it said has received encouraging consumer response in launch markets.

ITC's FMCG division, which includes its largest by sales - cigarettes - saw revenue rise 16.4%.

The company termed its progress in the quarter "commendable" in light of a challenging business environment which included "a steep increase in taxes/duties on cigarettes".

Show the press release

Financial Results for the Quarter ended 31st December, 2013

Net Profit up 16.3%

Highlights

  • Net Revenue : +13.1%
  • Profit Before Tax : +16.3%
  • Net Profit : +16.3%
  • Robust growth of 13.1% in Net Revenue despite a challenging business environment.
  • New FMCG businesses register a healthy revenue growth of 16.4%. Segment Profits at Rs. 10 crores driven by enhanced scale and improvement in operating leverage.
  • Hotels Business records significant improvement in profitability aided by superior performance by ITC Grand Chola.
  • Agri Business profits grow 19.0% driven by higher realisation and superior mix.
  • Paperboards, Paper & Packaging Segment Revenue up 18.2% driven by recent capacity additions in paperboards and packaging. Price and cost control actions partially mitigate the impact of steep hike in input prices.
  • ITC is the only Indian company to be rated amongst the Top 10 global FMCG companies in terms of value creation during the period 2008-2012 by Boston Consulting Group.

ITC posted yet another impressive performance during the quarter with healthy topline growth and high quality earnings. This performance is particularly commendable when viewed against the backdrop of the highly challenging business context in which it was achieved, namely, the significant deceleration in consumption expenditure, sustained high inflationary conditions and the steep increase in taxes/duties on Cigarettes. Gross Revenue for the quarter grew by 12.9% to Rs. 12223.44 crores driven by the new FMCG businesses and the Paperboards, Paper & Packaging segment. During the quarter, Profit Before Tax increased by 16.3% to Rs. 3440.30 crores while Net Profit at Rs. 2385.34 crores registered a growth of 16.3%. Earnings Per Share for the quarter stood at Rs. 3.01.

FMCG

The Branded Packaged Foods businesses posted robust growth in revenues and enhanced market standing across categories by leveraging a portfolio of differentiated and innovative products.

In the Staples, Spices and Ready-to-Eat Foods business, 'Aashirvaad' atta sustained its high growth trajectory and consolidated its leadership position across markets. The premium variants - 'Multi-grain' and 'Select' - continued to perform well. In the Bakery and Confectionery Foods business, the recently launched 'Sunfeast Delishus' gourmet cookies and 'Candyman Jellicious' in the jelly segment were extended to target markets and garnered increasing consumer franchise. The business also sustained its leadership position in the cream biscuits segment. The Snack Foods business recorded strong growth during the quarter with the recently launched region-specific variants gaining traction with consumers. In the Instant Noodles category, 'Sunfeast Yippee!' grew at a rapid pace gaining consumer franchise. During the quarter, the business also launched a highly innovative 'tricolour pasta' format in 2 exciting variants. The product has received encouraging consumer response in launch markets.

The Personal Care Products business continued to make steady progress in the fast-growing Deodorants  category with  the  'Engage' range  of  deodorants  continuing  to  receive  good response from consumers.

The Education & Stationery Products business consolidated its position as the leading player in the Indian stationery market driven by its flagship brands - 'Classmate' for the student community and 'Paperkraft' for office and executive requirements.

Overall, the new FMCG businesses recorded a robust growth of 16.4% in Revenue despite a marked slowdown in consumption expenditure. The segment also recorded a profit of Rs. 10 crores during the quarter on the back of enhanced scale and improvement in profitability.

TOP

Hotels

The hospitality sector continued to be adversely impacted by the weak economic conditions and high levels of room inventory in key Indian cities leading to a relatively weak pricing scenario. Consequently, growth in Segment Revenues remained muted. Segment Results, on the other hand, grew by 12.1% during the quarter aided by improved financial performance by ITC Grand Chola.

In line with its strategy of expanding presence in an asset-light manner, the business commenced providing operating services at 3 properties (2 in Kerala, 1 Chandigarh) under the 'WelcomHotel' brand  during  the quarter.  Along  with  the  390-room  WelcomHotel,  Dwarka which was operationalised in August 2013, the business has added appx. 650 rooms to its national  footprint  during  the  year  through  the  management contract  route. Construction activity of the new properties at Kolkata, Hyderabad, Bengaluru and at the Classic Golf Resort near Gurgaon are progressing as per plans.

The Board of Directors, at its meeting in Kolkata on 17th January 2014, approved the financial Results for the quarter ended 31st December 2013, which are enclosed.

Original source: ITC

Sectors: Bakery, Confectionery, Dried foods, Emerging markets, Financials, Snacks

Companies: ITC

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