Bharat Forge (500493) Q4 01/02 earnings summary

Executive summary

• FY02 net sales fell 9.3% amid weak domestic demand; export growth and cost reductions limited the decline in PBT to 1.6% YoY.

• Strategy centered on export diversification, higher-value machined products, cost control, technology adoption and reduced dependence on individual markets and customer segments.

Financial highlights

• Net sales fell to Rs.4,232 million from Rs.4,664 million; total income declined 11% to Rs.4,831 million from Rs.5,448 million.

• PBDIT was Rs.1,197 million, down 10%; PBT was Rs.353 million versus Rs.359 million, while PAT fell to Rs.220 million from Rs.326 million.

• EPS was Rs.5.50 versus Rs.8.29; excluding the Rs.104 million deferred-tax charge, PAT was broadly unchanged and EPS after netting deferred tax was Rs.5.50.

• Export income rose 30% to Rs.1,104 million; exports represented 23% of sales versus 16% in FY01.

Outlook and guidance

• Domestic demand was expected to remain subdued in FY03, with no significant revival assumed in business plans.

• FY03 exports were expected to grow at least 50%, supported by Dana arrangements, China shipments and growth across existing customer segments.

• Continued cost and efficiency initiatives, alongside higher export revenue, were expected to improve profits.