Finolex Cables (FINCABLES) Q4 03/04 earnings summary

Executive summary

• FY04 total income Rs5,064.27m, up 9% YoY; profit after tax Rs295.58m, up 20%, supported by electrical cable growth, cost rationalisation and treasury earnings.

• Strategic shift away from declining traditional JFTC cables: Urse capacity is being adapted for high-end communication and light-duty electrical cables, while retaining the option to resume JFTC production.

Financial highlights

• Operating income including excise duty was Rs5,181.47m vs Rs4,977.79m; profit before tax Rs325.58m vs Rs282.23m, including net extraordinary expense of Rs36.92m.

• Adjusted for extraordinary items, PBT was Rs362.51m; PAT was Rs295.58m vs Rs247.18m. EPS was Rs10.87 before and Rs9.66 after extraordinary items.

• Consolidated revenue net of excise was Rs5,229.89m vs Rs5,201.29m; PAT was Rs217.32m, with Rs291.94m equity-method associate profit added, taking the total to Rs509.26m.

• Product exports were Rs566.41m vs Rs838.44m; the prior-year comparison was affected by international market uncertainty.

Outlook and guidance

• Electrical cable demand was expected to rise in FY05, supported by construction, housing, agriculture, water-management initiatives, automotive growth and industrial recovery.

• High-end communication cables, including LAN, coaxial and optic fibre, were expected to grow; LAN and switchboard cable sales were expected to exceed industry growth rates.

• The first phase of the optic fibre project remains on hold pending arbitration over techno-commercial issues with the equipment supplier.

• Urse JFTC plant conversion to light-duty electrical cables is staged and requires nominal capital expenditure; JFTC production can resume if demand recovers.