Escorts Kubota (ESCORTS) Q4 04/05 earnings summary

Executive summary

• 15-month period ended Sep. 30, 2005; core businesses were described as improving, with agri machinery positioned as the main growth driver.

• Healthcare divestment supported reported profits, while tractor operations remained constrained by liquidity and recorded an operational cash loss.

Financial highlights

• Standalone sales and business income were Rs. 1,307.93 cr; investment income was Rs. 505.73 cr, including a one-time Rs. 505.51 cr healthcare divestment gain.

• Standalone PBT was Rs. 31.02 cr and PAT Rs. 39.09 cr, versus losses of Rs. 421.74 cr and Rs. 313.54 cr in the prior period; Rs. 243.02 cr was provided for diminution and other losses.

• Consolidated revenue was Rs. 2,737.15 cr and PAT attributable to the parent Rs. 120.84 cr; consolidated EPS was Rs. 19.48, versus a Rs. 52.45 loss per share.

• Tractor operations generated an operational cash loss of Rs. 169.74 cr; liquidity constraints limited production despite 32% industry growth in FY 2004-05.

Outlook and guidance

• Tractor industry expected to exceed 3 lakh annual units the following year; management forecast 8–10% industry growth in coming years.

• FY 2005-06 exports targeted at 6,800 tractors, up from 3,855 in the 15-month period; auto suspension exports expected to exceed 20% of turnover.

• Auto suspension export business expected to more than double within two years; aftermarket sales targeted to exceed Rs. 20 cr.

• Construction equipment expected to improve substantially in FY 2005-06; railway equipment growth supported by new products and a second facility.