ITC, the cigarette to hotel conglomerate on Friday posted a 19.65 percent year-on-year drop in standalone net profit to ₹ 3,232.40 crores. According to reports, the company’s quarterly profit fell due to a slump in the sale of cigarettes. Last year, in the same quarter, the company reported a net profit of ₹ 4,023.10 crores. Consolidate net profit in the quarter under review was at ₹ 3,413.44 crores, down by 18.23% year-on-year.
Total revenue from its products and services in the September quarter was at ₹ 11,750 crores last year, this year it hiked up to ₹ 11,891.9 crores. The conglomerate’s other operating revenue, which was at ₹ 121.31 crores last year in the same quarter, dropped to ₹ 84.84 crores this year.
Although during the COVID-19 pandemic led lockdown time the consumer products were labeled as essential services, the companies faced problems in the supply chain and also faced severe labor issues as the lockdown forced thousands of laborers to migrate back to their homeland.
Demand got back as the lockdown got lifted, however, for companies like ITC or its peers like Hindustan Unilever Ltd., Marico Ltd., Dabur India Ltd., and Godrej Consumer Products Ltd., full recovery might take some time.
An increasing number of daily COVID-19 cases across the nation saw many states apply localized lockdowns and restrictions, especially in July and August which affected the recovery of the company. The company said that they are sharply focusing on cost reduction measures” and also informed that the increased mobility as the lockdowns are lifted is adding to the fallen economy.
Restricted hours of convenience stores during the September quarter saw a drop in the sale of cigarettes. As the lockdowns are lifted, the company informs that it has become easier for them to serve the market and answer to the growth in demand.
According to the report from the company, revenue from cigarettes went down from ₹ 5,326.83 crores last year to ₹ 5,121.30 crores this year in the same quarter.
The company also said that the wide availability of smuggled cigarettes continues to remain a challenge for the legal industry which has witnessed a significant reduction in volumes in recent years.
The demand for FMCG products, although was a little lower during the lockdown period, was back to pre COViD-19 levels as soon as the lockdown got lifted. Revenue from the FMCG business hiked to ₹ 8916.25 crores this year in the September quarter from ₹ 8615.14 crores in the same quarter a year before.
Coronavirus pandemic also affected the company’s hotel business. Lack of tourism during the pandemic laden times and the imposition of lockdown since the last week of March saw the revenue fall down to ₹ 81.96 crores from ₹ 426.63 crores a year before.
On the other hand, revenue from Agri based business of ITC rose to ₹ 2985.2 crores from ₹ 2647.52 crores in last year. In the September quarter, the total expenses of the company were estimated at ₹ 9,164.68 crores. This marks an increase in expense by 8.39 percent, which was ₹ 8,455.16 crore, a year before.
News agency Mint reported comments from the Kolkata-headquartered diversified conglomerate as they said, “The operating environment remained extremely challenging during the quarter with the unabated increase in daily covid cases prompting several states to impose localized lockdowns. This impacted the recovery momentum, particularly in the months of July and August, and posed significant challenges to sales operations. The situation continues to improve with the progressive easing of restrictions from September’20.”