Blue Star (500067) Q4 11/12 earnings summary

Executive summary

• FY12 revenue fell to ₹2,724.59 crore from ₹2,892.91 crore; operating profit before interest, depreciation and tax dropped to ₹13.25 crore from ₹282.58 crore.

• Standalone net loss was ₹89.15 crore versus ₹155 crore profit in FY11; consolidated net loss was ₹105.10 crore versus ₹160.96 crore profit.

• Fixed-price project overruns, sluggish execution and collections, inflation, and rupee depreciation drove the sharp deterioration.

Financial highlights

• Standalone revenue from operations, net of excise, was ₹2,700.28 crore versus ₹2,858.92 crore; total revenue was ₹2,724.59 crore, down 5.8% YoY.

• Materials, project costs and traded goods rose to 77.2% of revenue from 71.5%; employee costs were ₹206.91 crore versus ₹206.14 crore.

• Operating and general expenses rose 15.9% to ₹418.58 crore, or 15.4% of revenue versus 12.5%; bad-debt write-offs and doubtful-debt provisions increased.

• Finance costs climbed to ₹70.25 crore from ₹24.36 crore, including ₹36.67 crore of FX loss and forward-cover costs; depreciation was ₹31.45 crore.

• Consolidated revenue was ₹2,843.03 crore versus ₹3,012.59 crore; consolidated net loss was ₹105.10 crore versus profit of ₹160.96 crore.

Outlook and guidance

• FY13 outlook: modest profitability expected, supported by cost controls, cash collections and working-capital discipline; recovery depends substantially on economic growth.

• New order-booking rules set minimum gross margins and payment terms; longer-term value-chain cost reductions were expected to begin yielding results in FY13.

• FY13 plans included a new digital-scroll VRF system and continued R&D investment in energy efficiency, eco-friendly refrigerants and product technologies.