BENGALURU (Reuters) – Indian tobacco-to-hotels conglomerate ITC missed first-quarter profit estimates on Thursday as higher expenses and competition from more affordable brands hurt.
The Sunfeast biscuits maker’s profit edged up to 49.17 billion rupees ($587.4 million) for the quarter but missed analysts’ estimate of 51.62 billion rupees, per LSEG data.
ITC, like peers Dove-soapmaker Hindustan Unilever and Maggi noodles-manufacturer Nestle India, faced stiff competition from local rivals that typically offer cheaper alternatives.
There was high “competitive intensity” from local and regional manufacturers in categories such as biscuits, snacks, noodles, education and stationery products, ITC said in an investor presentation.
Meanwhile, total expenses rose nearly 11%.
India’s retail inflation rate hovered around 5% during April-June, mostly due to high food prices, forcing consumers in the world’s most populous country to cut back wherever possible to make ends meet.
For ITC, overall revenue from operations increased 7.2% to 182.20 billion rupees, mainly helped by higher sales of cigarettes.
Other consumer goods makers have reported mixed results.
Hindustan Unilever posted higher earnings as product price cuts led to increased demand while Nestle India reported its slowest growth in eight years as price increases drove consumers away.
Shares in ITC closed marginally lower ahead of results. In the April-June quarter, the stock fell 0.8%, compared to a 5.2% gain in the Nifty consumer goods index.
($1 = 83.7060 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai and Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala and Nivedita Bhattacharjee)
