Britannia Industries (BRITANNIA) Q4 05/06 earnings summary

Executive summary

• FY06 gross sales rose 13% to Rs 18,179 mn; operating profit increased 7% to Rs 1,762 mn, while PBT before exceptional items fell 19% to Rs 1,958 mn.

• Profit after tax after exceptional items was Rs 1,464 mn, down 2% YoY; EPS was Rs 59.96.

• Higher commodity and fuel costs, together with aggressive pricing, pressured margins despite supply-chain efficiencies, product launches and capacity additions.

Financial highlights

• Gross sales Rs 18,179 mn, up 13% YoY; net sales Rs 17,133 mn versus Rs 15,095 mn.

• Operating profit Rs 1,762 mn, up 7%; operating margin 10.3% versus 10.9% YoY.

• PBT before exceptional items Rs 1,958 mn, down 19%; reported PBT after exceptional items Rs 2,007 mn, down 9%.

• PAT after exceptional items Rs 1,464 mn versus Rs 1,488 mn; EPS Rs 59.96 versus Rs 60.59.

• Cash flow generation after exceptional items Rs 1,681 mn versus Rs 1,678 mn; operating cash flow Rs 649 mn versus Rs 1,961 mn.

Outlook and guidance

• Biscuit market growth momentum of 11–13% was expected to continue in the coming year, with economic growth and consumer demand supportive.

• Wheat, sugar, oils and fuel inflation, plus intense price competition, were expected to keep industry margins under pressure.

• Focus areas included profitable growth, high-value opportunities, and managing the mix of brands, packs and channels without raising consumer prices.

• Brand investment, activation and new launches were planned to support growth; bread, cake and rusk businesses and exports were also targeted for expansion.