Amara Raja Energy & Mobility (500008) Q4 03/04 earnings summary

Executive summary

• FY 2003-04 sales edged up to Rs. 1,999.2 million from Rs. 1,987.3 million, while PAT fell to Rs. 13.90 million from Rs. 74.01 million.

• Performance was pressured by weak telecom battery realizations, lower industrial volumes, sharply higher lead costs and a Rs. 102.18 million non-cash deferred revenue expense write-off.

• Automotive batteries, Quanta UPS batteries and exports expanded; investments in fixed assets continued to be funded internally.

Financial highlights

• Gross sales were Rs. 1,999.23 million versus Rs. 1,987.35 million YoY; net sales were Rs. 1,759.02 million versus Rs. 1,736.53 million.

• Profit before tax was Rs. 11.52 million versus Rs. 117.34 million; PAT was Rs. 13.90 million versus Rs. 74.01 million.

• The Rs. 102.18 million non-cash deferred revenue charge significantly reduced reported PBT and PAT; the chairman said PBT excluding this charge would be close to the prior-year level.

• EPS was Rs. 1.22 versus Rs. 6.50; proposed dividend was Rs. 1.50 per share, or 15%, with total dividend and tax of Rs. 19.27 million.

Outlook and guidance

• Lead-price effects were expected to weigh further in FY 2004-05; management expected prices to soften but noted the global supply-demand outlook remained uncertain.

• Automotive battery volumes were expected to rise with new OE accounts and deeper aftermarket reach; Quanta volumes were also expected to grow on encouraging OEM and trade-channel response.

• Telecom battery demand could improve as replacement needs emerge and investment expands, though recovery and pricing remained dependent on industry changes and capacity additions.

• Exports were targeted for continued growth, with industrial battery exports expected to scale over the next three to five years.