ESAB India (ESABINDIA) Q4 2003 earnings summary

Executive summary

• Returned to profitability in 2003: net income Rs. 6.983m vs. a Rs. 116.172m loss in 2002; revenue growth and a strong Consumables turnaround offset continued Equipment losses.

• EBITDA improved by Rs. 168.8m YoY to Rs. 92.237m, after substantial provisions for doubtful debts, obsolete inventory and retirement benefits.

Financial highlights

• Gross sales rose 8% to Rs. 1,524.815m; net sales, after excise, increased over 7% to Rs. 1,341.131m.

• Operating profit was Rs. 14.079m vs. an operating loss of Rs. 144.577m; PBT was Rs. 6.332m vs. a loss of Rs. 146.505m.

• Net income was Rs. 6.983m vs. a loss of Rs. 116.172m; EPS was Rs. 0.45 vs. negative Rs. 7.55.

• Materials consumed fell 3% despite ~8% sales growth; materials cost declined from 68% to 62% of sales, aided by product mix and productivity.

• Q4 provisions totaled Rs. 60m for accelerated depreciation, doubtful debts, asset write-offs, inventory write-downs and additional pension provision.

Outlook and guidance

• Welding demand was expected to remain strong in 2004, supported by infrastructure spending and activity in steel-using industries; production, sales and service capacity were aligned to demand.

• Consumables was expected to deliver further improvement in 2004, barring unforeseen circumstances; electrode output rose over 18% and plants had recently operated near full capacity.

• An external review of Equipment products and production processes was due to report in May 2004; renegotiated terms for transferring production from Thailand were described as more favorable.