DCM Shriram (DCMSHRIRAM) Q4 05/06 earnings summary

Executive summary

• FY06 consolidated revenue reached Rs. 2,535.8 crore, up 28% YoY; operating profit was Rs. 295.1 crore, up 25%, and net profit after minority interest was Rs. 118.2 crore versus Rs. 104.7 crore.

• Growth reflected higher volumes in chemicals, plastics and sugar, stronger first-half chemical margins, and improved sugar and cement realizations, despite price and input-cost pressures.

• Chloro-vinyl expansions were completed and stabilized; sugar expansion and newer rural retail and Fenesta businesses were positioned to drive further growth.

Financial highlights

• Consolidated net sales were Rs. 2,391.9 crore versus Rs. 1,868.9 crore; PBDIT was Rs. 295.1 crore versus Rs. 235.3 crore.

• Consolidated profit before exceptional items and tax was Rs. 172.5 crore versus Rs. 143.4 crore; net profit after minority interest was Rs. 118.2 crore versus Rs. 104.7 crore.

• Standalone sales were Rs. 2,476.3 crore, up 30%; profit before tax excluding exceptional items rose 19% to Rs. 165.1 crore, and PAT was Rs. 115.2 crore.

• Standalone EPS was Rs. 6.94 versus Rs. 6.27; prior-period EPS was restated for the 1:5 share split and 1:1 bonus issue.

Outlook and guidance

• Completed and planned capacity additions were expected to support healthy volume growth over the next two years and cushion softer chemical and PVC prices and rising costs.

• Sugar capacity was targeted to rise from 14,000 to 33,000 TCD by November 2006; co-generation capacity was planned to increase from 24 MW to 81 MW, including 38 MW for grid exports by November 2007.

• Urea feedstock conversion to LNG was targeted for September/October 2006, subject to long-term gas supply arrangements, to lower production costs.

• Fenesta order booking reached 1.16 lakh windows in FY06 versus 0.25 lakh; break-even was expected within 12–18 months, with higher growth anticipated over the next two to three years.

• Plans called for continued expansion of Hariyali Kisaan Bazaar and Fenesta, alongside cost competitiveness and further development of existing businesses.