Britannia Industries (BRITANNIA) Q4 07/08 earnings summary

Executive summary

• FY08 net sales rose 17.5% to Rs. 25,848 Mn; net profit increased 77.5% to Rs. 1,910 Mn, with operating margin up 307 bps to 7.5%.

• Consolidated turnover was Rs. 28,099 Mn and consolidated net profit was Rs. 1,774 Mn for the year ended March 31, 2008.

Financial highlights

• Gross turnover and other income reached Rs. 26,679 Mn vs. Rs. 23,487 Mn; PBT was Rs. 2,323 Mn vs. Rs. 1,184 Mn, and PAT was Rs. 1,910 Mn vs. Rs. 1,076 Mn.

• EPS rose to Rs. 79.95 from Rs. 45.06; cash flow generation was Rs. 2,201 Mn vs. Rs. 1,329 Mn.

• Adjusted for exceptional items, PBT was Rs. 2,432 Mn vs. Rs. 1,261 Mn; FY08 exceptional items were Rs. 109 Mn, including Rs. 130.5 Mn VRS cost amortisation, partly offset by a property-sale gain.

• Consolidated net sales were Rs. 27,769 Mn; consolidated PAT was Rs. 1,774 Mn vs. Rs. 1,051 Mn, and consolidated EPS was Rs. 74.27 vs. Rs. 44.01.

Outlook and guidance

• FY09 outlook called for measured bakery growth and moderate biscuit growth amid slower GDP and discretionary spending, supply constraints, and intensifying competition.

• Strategy focused on profitable growth via brand, geography and channel expansion, segmented price increases, cost reduction, supply-chain responsiveness and consumer-focused innovation.

• Wheat, sugar and oil prices had risen 20%, 10% and 30%, respectively; inflationary pressure was expected to increase in FY09.