Finance of Itc Essay Sample
- Pages: 2
- Word count: 415
- Rewriting Possibility: 99% (excellent)
- Category: business
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Introduction of TOPIC
Cigarette volumes decline ~1.5%; EBIT up 18.0%
Cigarette business reported 7.1% increase in net sales and 18.0% increase in EBIT as margins expanded 590bps. Volumes declined 1.5% as realizations increased 15%. 64mm cigarettes continued to report strong traction as ITC launched three new offers – ‘Flake Galaxy’, ‘Flake Liberty’ & ‘Silk Cut Virginia’ in this segment in various markets.
ITC has increased prices by another 2% in July mainly due to price increase in Gold Flake Filter which should support profitability and enable 18% cigarette growth in FY14 even as full impact of VAT changes will be reflected in the coming quarters. Recent judgment of the Supreme Court revoking the stay on surrogate advertising for tobacco products is unlikely to impact the industry negatively. We are increasing cigarette EBIT growth estimates for FY14 from 15% to 18% due to 17% increase in prices as against earlier estimates of 15%.
FMCG BUISNESS OVERVIEW FMCG business posted 18.4 sales
Net sales have increased by 10.5% to Rs74.1bn. Gross margins have declined 30bps due to an increase in material cost. However, EBITDA margins were maintained due to reduction in employee cost and other expenditure and EBITDA increased 17.5% to Rs27.9bn. PAT increased by 18.1% to Rs18.9bn. Cigarette EBIT has increased 18% while FMCG business has reported negative EBIT, although loss has declined by 51%. Hotels and Paper Business continue to remain under pressure. Decline in other expenses by 2% has boosted margins; other expense decline was due to lesser event based promotions and operating leverage.
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