Blue Star (500067) Q4 00/01 earnings summary

Executive summary

• First full year after the software demerger; total income grew 15% on a like-for-like basis and profit after tax rose 55%, despite slow economic growth and intense price competition.

• Performance reflected improved market share, cost control, higher productivity and working-capital discipline; operations remained focused on airconditioning, refrigeration and professional electronics.

Financial highlights

• Total income was Rs 509.82 crore; like-for-like growth was 15% against prior-year income excluding software of Rs 443.81 crore.

• Profit before tax was Rs 25.57 crore, up 50% against Rs 17.10 crore excluding software; profit after tax was Rs 23.54 crore, up 55% against Rs 15.14 crore.

• Profit before interest, depreciation and taxation was Rs 46.19 crore; interest expense was Rs 8.69 crore and depreciation was Rs 11.59 crore.

• Gross margin held at 26%; total expenses grew 7.5% against revenue growth of 15%, while employee costs fell to 9.9% of total income from 10.7%.

Outlook and guidance

• Management expected to continue benefiting from brand-equity investments and market-share gains in room and central airconditioning.

• Commercial refrigeration was identified as a major growth thrust; management expected demand to accelerate as awareness of refrigeration for perishables increased.

• Near-term economic and demand slowdown remained possible, despite optimistic five-year growth forecasts for airconditioning's key demand segments.

• Planned further upgrades to product-testing facilities to support quality assurance.