Five takeaways from ITC's latest quarterly results
The FMCG company had a profit of Rs 3,343.4 crore in the first quarter of fiscal year 2022 — 12.4 percent lower than in the previous quarter.
FMCG company ITC reported a consolidated profit of Rs 3,343.4 crore in the first quarter of fiscal year 2022 (FY 2022). It was 12.4 percent lower than in the previous quarter, but 30 percent more than its net profit a year ago.
Its total income of Rs 14,687.8 crore in the first quarter of FY 2022 was 29 percent more than a year ago. However, it dipped 8 percent, compared to ITC’s revenue in the quarter ended March 2021.
ITC attributed the sequential dip to localised lockdowns and mobility restrictions across states, imposed to tackle the second wave of COVID-19. This made the "operating environment during the quarter extremely challenging, and impacted the strong recovery momentum witnessed in recent quarters," ITC informed stock exchanges.
The second wave also triggered an uptick in demand in staples and convenience foods. But, the trend of consumers stocking up essentials was far less pronounced compared to the lockdown a year ago, the company added.
Here are some highlights from its latest quarterly results:
- ITC’s revenue from cigarettes was Rs 5,802.7 crore, which fell 10.8 percent sequentially. This accounted for over 40 percent of gross revenue in the first quarter of FY 2022.
- Its other FMCG products clocked revenue of Rs 3,731.4 crore, which was 10 percent more than a year ago and 1 percent more than in the previous quarter. This segment includes personal care products, packaged foods, and apparel.
- Its hotels business incurred a loss in the first quarter of FY2022 of Rs 159.6 crore, compared to Rs 257.4 crore a year ago. The loss for this segment was Rs 40.3 crore in the quarter ended March 2021.
- The paperboards, paper and packaging segment clocked revenue of Rs 1,582.7 crore, growing 54 percent over a year ago, but 4 percent lower than in the quarter ended March 2021. Domestic sales were positive because of pharmaceuticals and consumer goods industries, and exports recorded strong growth, ITC said.
- ITC's agri business reported revenue of Rs 4,109.8 crore, growing 21.5 percent sequentially, and 9.2 percent on a year-on-year basis.
“The business leveraged the e-Choupal network to provide strategic sourcing support to the branded packaged foods businesses, calibrating its procurement strategies in line with category-relevant market dynamics,” the conglomerate said in its stock-exchange filing.
ITC has been scaling its agri-solutions platform e-Choupal 4.0 to provide customised solutions to farmers. This platform has been networking with nearly 10 million farmers and almost 4,000 Farmer Producer Organisations (FPOs), according to the company.
The conglomerate also launched ‘Astra’, an AI/ML enabled and advanced analytics based digital platform that has helped make procurement more efficient.
As the pandemic pushed digitisation in the FMCG sector, the ITC e-store—its D2C platform—rolled out more than 800 products in over 45 categories. The platform was launched in March 2020, and is operational in 11 cities.
Research analytics firm CRISIL expects revenue in the fast-moving consumer goods (FMCG) industry to double from the 5 percent to 6 percent range last fiscal to the 10 percent to 12 percent range in the current fiscal.
In a report dated July 27, 2021, CRISIL forecasts moderation in rural growth this fiscal because of COVID-19 infections. “However, recovery in urban demand for FMCG products will offset this and outpace rural revenue growth,” the report added.
Edited by Kunal Talgeri