FMCG major ITC reported that its Paperboards, Paper, and Packaging segment showed signs of demand recovery during the first quarter of FY2024. However, the segment’s performance was significantly impacted by the influx of cheap Chinese supplies into international and Indian markets, coupled with rising domestic wood prices.
In a statement released, ITC noted, “While green shoots of demand recovery emerged during the quarter in the paperboards, paper, & packaging segment, performance remained impacted largely due to cheap Chinese supplies in international markets, including India, and a surge in domestic wood prices.”
The company also highlighted that muted domestic demand further affected performance. ITC pointed out that structural weaknesses in the Chinese economy persist, contributing to the challenging market conditions. Additionally, ITC observed strong growth in its value-added agricultural products segment, driven primarily by coffee and spices.
Financial Performance:
- Net Profit: ITC reported a marginal increase in standalone net profit for the quarter ended June 30, 2024, at Rs 4,917.45 crore, compared to Rs 4,902.74 crore in the same period last year. This figure was below market expectations of Rs 5,122 crore.
- FMCG Segment: Revenue from the FMCG segment jumped 6.3% on a high base, with growth driven by staples, snacks, dairy, personal wash, fragrances, homecare, and agarbatti. The segment’s EBITDA margin expanded by 25 basis points year-on-year to 11.3%.
- Cigarettes Segment: Net segment revenue from cigarettes increased by 7%, while segment PBIT (Profit Before Interest and Taxes) rose by 6.5% year-on-year.