Cummins India (500480) Q4 01/02 earnings summary

Executive summary

• FY ended Mar. 31, 2002 standalone sales fell 14% to Rs 7,409m and net profit fell 21% to Rs 863m amid weak demand and lower volumes; gross margin was broadly maintained.

• Consolidated sales and other income were Rs 10,520m, net profit Rs 1,035m and EPS Rs 5.23; consolidated prior-year comparatives were not presented in this first year of consolidation.

Financial highlights

• Standalone PBT declined 21% to Rs 1,140m; EPS was Rs 4.36 versus Rs 5.50, while sales were Rs 7,409m versus Rs 8,603m.

• Export earnings were Rs 2,732m versus Rs 2,853m; domestic sales were Rs 4,624m versus Rs 5,749m. Reported export sales in the financial review were Rs 2,785m versus Rs 2,854m.

• Other income rose to Rs 364m from Rs 227m, including Rs 268m from investment income and gains on investment sale/redemption versus Rs 93m.

• Adjusted for the Rs 49m VRS compensation charge, reported expenses included a one-time workforce restructuring cost; employee cost also rose following a wage settlement.

• Operating cash flow was Rs 1,378m versus Rs 1,632m; cash generated from operations was Rs 1,522m versus Rs 1,993m.

Outlook and guidance

• Q1 FY03 improved, with improvement expected to continue through the year despite weak markets and low capital investment.

• Planned launches include engines in the 200–300 HP range, alongside product upgrades for tighter emissions requirements.

• Continued Six Sigma, Kaizen, cost reduction and process improvement were priorities for improving cost structure and execution.

• Mid-range engine exports were expected to grow significantly; smaller S and B series exports were identified as an opportunity.