BASF India (BASF) Q4 02/03 earnings summary

Executive summary

• FY ended Mar. 31, 2003: sales edged higher; profit before tax rose 20% to Rs. 462.5m and profit after tax increased 18% to Rs. 333.5m, supported by capacity utilisation, cost controls and lower interest expense.

• A 50% dividend, or Rs. 5 per share, was recommended for the third consecutive year despite drought-driven economic pressure.

Financial highlights

• Sales were Rs. 5,893.7m versus Rs. 5,843.9m; profit before exceptional items was Rs. 462.5m versus Rs. 455.7m.

• Prior-year asset impairment of Rs. 70m reduced FY 2001-02 PBT to Rs. 385.7m; FY 2002-03 PBT was Rs. 462.5m, while PAT rose to Rs. 333.5m from Rs. 282.5m.

• Basic and diluted EPS increased to Rs. 11.83 from Rs. 10.02; exports rose to Rs. 620m from Rs. 584m.

• Operating cash flow was Rs. 2.5m versus Rs. 479.4m; working-capital changes, tax payments and Rs. 70.7m of VRS expenditure weighed on cash generation.

Outlook and guidance

• Nutrition’s outlook was encouraging; technical service fees rose during FY 2002-03, with business prospects supported by growth in user industries and export trends.

• EPS demand was expected to grow 10%; volatile styrene monomer prices remained a potential constraint on profits.

• Textile chemical sales were expected to benefit from modernisation, eco-friendly processing and increased fabric exports; industry growth was forecast at 5%.

• Speciality chemicals were expected to grow substantially, while higher raw-material prices seen late in the year could pressure margins in the short to medium term.