Key Business Metrics1
Gross revenue is up +3.4%. Gross revenue (excluding wheat & rice exports) is up +8.9%.
Wheat & Rice exports: Geopolitical tensions & climate emergencies raise concerns on food security and trade restrictions are imposed by the Government (stock limits on wheat, ban on non-basmati rice exports and export duty on parboiled rice)
Profit (after tax) is up +10.3%. Profit (before exceptional items & tax) is up +9.7%. This is broadly in-line with pre-announcement expectations of +10% profit growth
Cigarette Segment: 39% weight in gross revenue, 79.5% weight in operating profit
Resilient performance in the cigarette segment:
– net segment revenue up +8.5% (up +10.1% including excise) and operating profit up +8.0%: driven by sustained volume gain from illicit trade (relative stability in taxes coupled with effective enforcement) and focused product portfolio & commercial interventions
– sharp cost increases (leaf tobacco & certain other inputs) and taxes increases are largely mitigated through improved mix, strategic cost management and calibrated pricing
Other Highlights:
– FMCG: margin expansion (+150bps to 11%) driven by premiumization, supply chain agility, pricing actions, digital initiatives and strategic cost management
– Mysuru factory (to manufacture and export of nicotine & nicotine derivative products conforming to US & EU pharma standards) is expected to commence exports over the next few months
– Paperboard, Paper & Packaging: negatively affected by the low-priced Chinese supplies and declining demand in China & EU markets as well as the sharp reduction in global pulp prices.
References:
