(Reuters) -Indian tobacco-to-hotels conglomerate ITC missed second-quarter profit estimates on Thursday, hit by higher costs of raw materials and a broader slowdown in demand for consumer goods.
Consumers in the world’s most populous country, particularly in urban areas, have been cutting back on spending due to rising prices of essentials, including food, squeezing bottomlines of major packaged goods makers.
The Gold Flake cigarettes maker’s profit rose 3% to 50.78 billion rupees ($604.2 million) in the quarter ended Sept. 30, missing estimates of 51.14 billion rupees, according to data compiled by LSEG.
“Subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs (were) witnessed during the quarter,” ITC said in a statement.
Higher prices of raw materials, including tobacco leaf, cocoa and crude oil, have also weighed on the consumer goods sector’s earnings for the July-September period.
For ITC, total expenses soared 21%, while its consumer goods business, which makes up two-thirds of its revenue, grew 6%, taking the shine off much bigger increases in its hotel and agri business.
Overall revenue still climbed 16% to 205.37 billion rupees for the quarter.
Peers Nestle India and Hindustan Unilever reported drops in profit on higher costs, while Dabur India and Varun Beverages posted downbeat numbers, blaming higher-than-normal monsoon showers.
Shares of ITC closed nearly 2% lower ahead of results amid broader declines, lowering their gains so far this year to 2%.
($1 = 84.0490 Indian rupees)
(Reporting by Praveen Paramasivam; Editing by Mrigank Dhaniwala and Maju Samuel)
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