Escorts Kubota (ESCORTS) Q4 03/04 earnings summary

Executive summary

• The 15-month period ended June 30, 2004 was marked by a severe loss, driven by operating weakness and telecom-related investment and loan losses; the prior period was 12 months and is not comparable.

• Tractor demand recovered as monsoons and rural-sector emphasis improved, while railway equipment, construction equipment and healthcare showed pockets of growth.

Financial highlights

• Standalone net sales were Rs. 1,098.07 crore; PBT was a loss of Rs. 421.74 crore and PAT a loss of Rs. 313.54 crore, including a Rs. 185.02 crore loss on investments and loans.

• Standalone EPS was a loss of Rs. 43.41 versus earnings of Rs. 3.33; a deferred tax credit of Rs. 108.20 crore reduced the post-tax loss.

• Consolidated revenue was Rs. 2,005.29 crore; loss before tax was Rs. 430.82 crore and loss attributable to shareholders was Rs. 319.49 crore.

Outlook and guidance

• Tractor sales target was 40,000 for the current financial year, rising to 60,000 annually within 3–4 years; exports were targeted at 5,000 tractors versus 2,850 in April 2003–June 2004.

• Export volumes were also targeted to rise from about 2,500 tractors in 2004 to about 6,000 in 2005, with product development and marketing positioned to support growth.

• Jaipur’s new 300-bed multispecialty hospital was expected to begin operations by March 2005.