Cigarettes still make 74% of ITC's profit despite a sharp fall in sales

Jul 24, 2020, 20:53 IST

BCCL

ITC reported around 26% drop to ₹2343 crore in its standalone profit for the first quarter ended June 30.
There was some cushion from agri business and packaged food but they are too small segments for ITC.
The profit from non-cigarette FMCG products was 1.6 times compared to year earlier but it was a measly ₹125 crore.

Year after year, there are reports about how ITC wants to shift focus away from cigarettes. The COVID-19 lockdown managed to achieve some of it as production was stalled and supply came to a grinding halt in most places.

Still, more than 74% of the company's standalone profit before tax came from the cigarettes segment. It was 87% in the same period a year earlier.

However, at a time when an economic crisis has dried up profit from everywhere else, ITC won't complain about the resilience of cigarettes. The sales for the April-June 2020 was still down about 30% year-on-year.

The big picture looks pretty bleak for ITC

The Indian multinational conglomerate ITC reported around 26% drop to ₹2343 crore in its standalone profit for the first quarter ended June 30.

Paper and packaging business— which contributed 10% of the revenue a year ago⁠— was down by a third and it was a complete washout of revenue from the hotels segment, which also clocked a loss of over ₹242 crore (before tax).

However, the numbers are still better than what analysts had predicted. According to various analysts reports, ITC was projected to see a profit dip of nearly 35%.