Media Statement - Financial Results for the Quarter ended 31st December, 2023
Standalone Financial Results for the Quarter ended 31st December, 2023
1Set up by ITC IndiVision Ltd. - a wholly owned subsidiary of the Company
2Being set up by ITC Fibre Innovations Limited - a wholly owned subsidiary of the Company
FMCG - Others | FMCG ‐ Cigarettes | Hotels
Agri Business | Paperboards, Paper & Packaging
The global economy remains sluggish with the pace of growth projected to decelerate for the third year in a row - from 2.6% in 2023 to 2.4% in 2024, nearly 75 bps below the average of the 2010s. Developing economies are projected to grow just 3.9% representing about 100 bps below the average of the previous decade, largely due to structural weakness in the Chinese economy. In Advanced economies, growth is set to slow to 1.2% in 2024 from 1.5% in 2023 (source: World Bank GEP Jan'24). The recent conflict in the Middle East has heightened geopolitical risks, and an escalation could weigh on growth even as the global economy continues to cope with the overlapping shocks of the past four years-the COVID-19 pandemic, the Russia-Ukraine conflict, unprecedented inflation, and subsequent sharp increase in interest rates.
India remains a bright spot amidst a slowing global economy with Real GDP growing by an impressive 7.6% YoY in Q2 FY24. This was driven by multi-dimensional and purposeful policy interventions by the Government of India with particular focus on infrastructure creation, which, inter alia, reflected in the strong growth of 11% YoY in Fixed Investments. Private Consumption, on the other hand, remained muted (especially in the value segment and rural markets), growing by only 3.1% YoY- well below the long-term average of about 7% p.a. Improving farm terms of trade, good recovery in winter crop sowing, and higher government spending augur well for a pick-up in rural demand going forward.
Amidst a challenging macro-economic and operating environment as stated above, and high base effect in some of its operating segments, the Company delivered resilient performance during the quarter. Gross Revenue stood at Rs. 17,483 crores representing a growth of 2.1% YoY (excl. Agri Business: up 3.9%) while PBT (before exceptional items) at Rs. 6,731 crores grew by 0.8% YoY. PAT grew by 10.8% YoY to Rs. 5,572 crores. Earnings Per Share for the quarter stood at Rs. 4.47 (previous year Rs. 4.06).
Exceptional items represent expenses aggregating Rs. 5.52 crores incurred during the quarter and nine months ended 31st December, 2023 in relation to the demerger of the Company's Hotels Business into ITC Hotels Limited.
The Company has reassessed its provisions relating to uncertain tax positions for earlier years based on a favourable order of the Hon'ble Supreme Court received during the quarter. This has resulted in a credit of Rs. 468.44 crores in the Current Tax expense for the quarter and nine months ended 31st December, 2023.
The Board of Directors have recommended Interim Dividend of Rs. 6.25 per share (previous year Rs. 6.00 per share) for the financial year ending 31st March, 2024.
With its focus on consumer centricity, purposeful innovation, agility, and execution excellence, the Company remains confident of navigating the short-term challenges and creating sustained value for all stakeholders.
FMCG - OTHERS
• Segment Revenue growing 7.6% YoY to Rs. 5,209 crores on a high base (2-yr CAGR +12.8%); Segment EBITDA margins expanded 100 bps YoY to 11%.
- The FMCG Businesses delivered resilient performance amidst slowdown in consumer demand; Staples, Dairy, Beverages, Fragrances, Personal Wash, Homecare, Agarbattis, Classmate Notebooks & Pens drive growth.
- Growth in both traditional and emerging channels (viz. Modern Trade, e-Commerce, Quick Commerce) continued to be driven by sharp execution of channel-specific business plans, collaborations, format-based assortments and category-specific sell-out strategies. Competitive intensity remained high in certain categories such as Biscuits, Snacks, Noodles, popular Soaps, including from local/regional players.
- Strategic portfolio augmentation leveraging agile and purposeful innovation continues to be stepped up towards addressing evolving consumer needs and accelerating premiumisation.
- While certain commodity prices declined on a YoY basis, the cost table remains elevated compared to pre-pandemic levels; commodities such as wheat, maida, sugar etc. witnessed sequential uptick in prices. The Businesses continue to drive profitability improvement through multi-pronged interventions viz. premiumisation, supply chain optimisation, digital initiatives across the value chain, strategic cost management and judicious pricing actions.
- The Company's Trade Marketing & Distribution highway has transformed into a smart omni-channel network including 6 Direct to Consumer (D2C) platforms. Category specific D2C platforms viz. Classmateshop.com, Dermafique.com and Aashirvaad.com/Meri Chakki are being scaled up to gain consumer insights, as well as commerce. These initiatives continue to receive encouraging consumer response.
- The Company's digitally powered eB2B platform, UNNATI app (now also available in several vernacular languages) covers over 6.4 lakh outlets, facilitating sharp and direct engagement with retailers, superior analytics, personalised recommendations of hyperlocal baskets based on consumer purchase insights, and deeper brand engagement.
► Branded Packaged Foods Businesses
• 'Aashirvaad' Atta posted robust growth reinforcing its leadership position in the Branded Atta industry
-Value-added atta range sustained its strong growth momentum driven by increased thrust in Modern Trade and e-Commerce channels.
-In line with its strategy to address value-added adjacencies leveraging mother brands, the Aashirvaad portfolio was augmented with the launch of 'Aashirvaad Atta with Millets' and 'Aashirvaad Millet Batter Mix', which contain the benefits of super grains like Jowar, Bajra, Ragi, Quinoa and Navane, and are naturally gluten free and a source of essential nutrients. These products have received excellent response and continue to gain consumer franchise in launch markets. Other value-added differentiated variants such as 'Gluten Free Flour', 'Ragi Flour', Rava ('Aashirvaad Samba Broken Wheat', 'Aashirvaad Bansi Rava' and 'Aashirvaad Double Roasted Suji Rava'), 'Aashirvaad Organic Dals', 'Aashirvaad Besan' and 'Aashirvaad Vermicelli' continued to scale up.
• 'Sunfeast' Biscuits and Cakes recorded resilient performance during the quarter with scale up of recent launches such as 'Sunfeast Supermilk' in Tamil Nadu and strong growth of the 'Mom's Magic' cookies range. The 'Sunfeast Dark Fantasy' range of differentiated cookies sustained its leadership position in the premium segment. Portfolio mix was further enriched with the launch of 'Sunfeast Dream Crème - Cookie & Crème' and 'Bounce Day & Night'.
• 'YiPPee!' Noodles sustained its position as a strong No. 2 brand amidst increasing competitive intensity. 'YiPPee! Magic with Millets', a recently launched variant, is being scaled up. The portfolio was enhanced with the introduction of 'YiPPee! Wow Masala', which witnessed excellent consumer response in launch markets. In line with its purpose of creating 'A Better World', the brand launched the 'YiPPee! Better World: Create Magic' initiative in partnership with the Times of India to convert post-consumption plastic waste to playground equipment for parks in Delhi-NCR, Mumbai, Bengaluru and Kolkata.
• 'Bingo!' Snacks continued to strengthen its product portfolio across an exciting range of snacks and namkeens, with a focus on the target cohort i.e. youth segment. Recently launched variants viz. 'Bingo! Nachos Chilli Limon' and millet-based 'Bingo! Tedhe Medhe Chatpata Twist' have been well received by consumers and are being scaled up. The portfolio was further strengthened with the launch of 'Bingo! 2X Hot and Spicy Korean-Style chips' in 3 sizzling variants - Original, Hot & Spicy, and Hashtag, blending the essence of fiery Korean spices with Bingo!'s classic crunch.
• In the Spices category, 'Sunrise' posted robust growth during the quarter. Product portfolio was fortified with the launch of 'Sunrise Restaurant Magic Masala' and 'Sunrise Yellow Mustard Powder'. In line with its strategy to expand presence in new markets, the Business launched a range of spices, 'Swaad Bihar Ka' catering to the taste and preferences of consumers in Bihar. 'Aashirvaad Spices' continues to enhance its presence in blended spices to enable full portfolio play.
• The Frozen Snacks category under the 'ITC Master Chef' brand delivered robust growth, powered by a range of innovative and differentiated offerings. Recently launched variants such as 'ITC Master Chef Paneer Pakoda', 'ITC Master Chef Batata Vada' and 'ITC Master Chef Crispy Onion Rings' continue to gain strong traction.
• 'Aashirvaad Svasti' fresh dairy portfolio comprising pouch milk, curd, lassi and paneer recorded strong growth on the back of best-in-class quality standards, differentiated products and superior taste profile. 'Aashirvaad Mithaas' range of Indian desserts was further augmented with the launch of 'Badam Halwa' and 'Moong Dal Halwa', which elicited excellent consumer response.
► In the Personal Care Products Business, 'Fiama' range of personal wash products and 'Engage' range of fragrances registered strong growth fuelled by sharp communication and consumer engagement, wider distribution and emerging channels. In the Homecare portfolio, Nimyle posted robust growth on the back of its unique proposition of '100% Natural Action' and hygienic floors for children and pets. The product range of 'Dermafique', a Digital First premium skin care brand, was expanded with the launch of Shower Mousse in 2 variants - Aqua Cloud and Hydra Soft with Natural Moisturizing Factor Technology which provides 24 hour hydrated and moisturised skin.
► In the Education and Stationery Products Business, 'Classmate' Notebooks fortified its leadership position with continued focus on portfolio premiumisation, exports and leveraging institutional strengths. The premium portfolio comprising 'Paperkraft', 'Classmate Pulse' and 'Classmate Interaktiv' continued to scale up. Business launched 'Classmate Play Series' Notebooks in Classmate Interaktiv featuring 3 collectible cover design variants. Further, 'Paperkraft' range of Expression Series was augmented with the launch of new theme based A5 notebooks.
'Mangaldeep' Agarbattis and Dhoop recorded robust growth during the quarter anchored on a range of differentiated products and enhanced visibility. The portfolio was fortified with the launch of 'Mangaldeep Scent' in 3 variants.
FMCG - CIGARETTES
The Cigarettes Business witnessed consolidation on a high base after a period of sustained growth momentum. 2-yr CAGR: Net Segment Revenue +9.3%, Segment PBIT +9.4%
• The Business continues to counter illicit trade and reinforce market standing by fortifying the product portfolio through innovation, democratising premiumisation across segments and enhancing product availability backed by superior on-ground execution.
• Differentiated variants and premium segment continue to perform well.
• Sharp escalation in costs of leaf tobacco and certain other inputs, along with increase in taxes were largely mitigated through improved mix, strategic cost management and calibrated pricing.
• As seen in the past, stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, enables volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos and bolstering revenue to the exchequer from the tobacco sector.
HOTELS
Stellar performance in Hotels Business continues with record highs in Revenue and Profits; Segment Revenue up 18.2% YoY (2-yr CAGR +33%); Segment PBIT up 57.1% YoY
• Strong growth in ARRs and Occupancies witnessed across properties driven by retail, MICE segments and marquee events like the ICC Cricket World Cup
-Strategic investments towards renovations and refurbishments continue in line with the commitment to deliver exceptional quality and seamless experience across properties.
• Segment EBITDA margin expanded by 470 bps YoY to 36.2% driven mainly by higher RevPAR, operating leverage and strategic cost management initiatives.
• Welcomhotel Chennai has been reopened in January 2024 after a comprehensive renovation; the iconic property brings back signature dining experiences, well-appointed rooms and grander banquets. The property is certified as a LEED Platinum and LEED Zero Carbon hotel.
• In line with its 'asset-right' strategy, the Business added three new properties during the quarter viz. 'Fortune Park, Aligarh', 'Fortune Park, Tiruppur' & 'Fortune Park East Delhi, Vivek Vihar'. With this, the Business has added 22 properties to its portfolio in the last 24 months. The pipeline of managed properties continues to be strengthened across Welcomhotel, Mementos, Storii, Fortune and WelcomHeritage brands.
• The Business has been recognised as the Best Luxury Hotel Chain in India at the Travel + Leisure India's Best Awards 2023 for the seventh consecutive year.
AGRI BUSINESS
Agri Business Revenue grew by 14.2% YoY (excl. Wheat & Rice) driven by Value Added Agri products & Leaf Tobacco
• The operating environment remained challenging due to various policy interventions of the Government of India to ensure food security and control inflation which limited business opportunities for the Agri Business.
• Capacity utilisation of the recently commissioned state-of-the-art value-added Spices processing facility in Guntur was ramped up. The Business is leveraging the facility's multi-dimensional capabilities, its identity-preserved sourcing expertise, custody of supply chain and strong customer relationships to rapidly grow export of spices to Food Safe Markets.
• The state-of-the-art facility (set up by IIVL, a wholly-owned subsidiary of the Company) to manufacture and export Nicotine and Nicotine derivative products has been commissioned. Regulatory approvals to commence shipments to the EU are in place, with exports expected to commence in Q4 FY24. The distinctive capabilities of the Company's Agri Business in crop development and the ability to provide complete traceability & assurance of sustainability across the value chain, will enable establishing IIVL as the trusted partner for supplying high quality nicotine/nicotine derivative products to discerning customers.
• ITCMAARS (Metamarket for Advanced Agriculture and Rural Services) - a crop-agnostic 'phygital' full stack AgriTech platform has been scaled up across nine states. Over 1600 Farmer Producer Organisations (FPOs) encompassing more than 11.4 lac farmers have been added to the Company's network.
PAPERBOARDS, PAPER & PACKAGING
The Segment remains impacted by low-priced Chinese supplies in global markets, muted domestic demand, unprecedented increase in domestic wood costs and high base effect; Segment Revenue declined 9.7% YoY
• Subdued consumer demand and a relatively muted festive season weighed on customer offtake during the quarter; export markets remain impacted by low priced Chinese supplies.
• Margins were impacted largely by sharp drop in realisations and unprecedented surge in domestic wood costs due to increased demand from competing industries; Segment PBIT declined 51.2% YoY.
• Demand for Fine paper remained relatively firm and Décor paper witnessed strong performance.
• Integrated business model and strategic interventions in import pulp substitution, High Pressure Recovery Boiler, digital interventions and cost competitive fibre chain partially mitigated inflationary impact. Business leveraged the recent investment in pulp mill capacity expansion to register record high in-house chemical pulp production during the quarter.
• The Packaging and Printing Business continues to focus on accelerating new business development in domestic and export markets offering innovative and customised solutions, with special focus on consumer electronics, QSR and personal care products. Capacity utilisation at the recently commissioned Nadiad unit in Gujarat continues to be ramped up to efficiently service customers in proximal markets.
• The sustainable paperboards/packaging solutions portfolio continues to witness strong growth leveraging cutting-edge innovation platforms. The Company's wholly owned subsidiary, ITC Fibre Innovations Limited, is in the process of setting up a state-of-the-art premium Moulded Fibre Products manufacturing facility in Badiyakhedi, Madhya Pradesh. The project is progressing as per schedule and is expected to be commissioned by the end of the financial year.
CONTRIBUTION TO SUSTAINABLE DEVELOPMENT
ITC is a global exemplar in 'Triple Bottom Line' performance and is the only enterprise in the world of comparable dimensions to have achieved and sustained the three key global indices of environmental sustainability of being 'water positive' (for 21 years), 'carbon positive' (for 18 years), and 'solid waste recycling positive' (for 16 years). The Company sustained its 'AA' rating by MSCI-ESG for the 6th successive year - the highest amongst global tobacco companies. The Company has also been included in the Dow Jones Sustainability Emerging Markets Index for the fourth year in a row - a reflection of being a sustainability leader in the industry and a recognition of its continued commitment to people and planet.
ITC has also been rated at the 'Leadership Level' score of 'A-' for both Climate Change and Water Security (Asia and Global average at 'C' for climate change and 'B' for water security) by CDP, a reputed independent global platform for disclosures on environmental impacts.
The Company's infrastructure facilities continue to set new benchmarks of sustainability. All luxury collection hotels of the Company are now LEED Platinum certified with 12 ITC Hotels being certified as LEED Zero Carbon and 2 ITC Hotels being certified as LEED Zero Water. Further, the Foods factory and the Cigarettes factory at Ranjangaon became the third and fourth units after Kovai Paper and Malur Foods unit to receive an AWS certification in Platinum category.
The Sustainability & Integrated Report 2023 is available on the Company's corporate website at
https://www.itcportal.com/sustainability/sustainability-integrated-report-2023/ITC-Sustainability-Integrated-Report-2023.pdf
Please refer link below for performance highlights of the quarter:
https://www.itcportal.com/investor/pdf/ITC-Quarterly-Result-Presentation-Q3-FY2024.pdf
The Board of Directors, at its meeting on 29th January 2024, approved the financial results for the quarter ended 31st December 2023, which are enclosed.
