India’s ITC reported a 20% year-over-year decline in quarterly profit to 41.37 billion rupees ($455.1 million) for the three months ended Sept. 30, as higher cigarette taxes, price increases, and rising raw material costs pressured its tobacco business. Profit from its cigarette segment fell more than 25%, with the company attributing weaker industry volumes to an “unprecedented increase in tax.” Cigarette manufacturers, including ITC and Godfrey Phillips India, have raised prices in recent months following the introduction of a new cigarette excise duty in India. ITC said material costs increased 15% because of sharp input cost escalation linked to the fallout from the Middle East war.
Despite the decline in profit, ITC’s total revenue increased 46% to 283.18 billion rupees ($3.1 billion), supported by demand for its consumer goods businesses and higher prices. The company said demand remained resilient in rural and urban markets but warned that uneven monsoon conditions and strengthening El Niño conditions could affect agricultural production and inflation. ITC shares have lost more than one-third of their value over the past year, compared with a 9% decline in India’s Nifty 50 index.
