Finolex Cables (FINCABLES) Q4 04/05 earnings summary

Executive summary

• FY05 delivered 16% growth in sales and other income and 14% growth in PBT, despite higher copper and polymer costs; communication cables were the fastest-growing major segment.

• Strategy centered on high-end communication products, expanded capacity, new switches, exports and stronger distribution; optimism was tied to infrastructure, construction and broader economic activity.

Financial highlights

• Sales and other income rose 16% to Rs. 5,874.904 million; PBT increased 14% to Rs. 371.312 million and PAT reached Rs. 307.707 million, versus Rs. 295.578 million in FY04.

• Income from operations including excise duty was Rs. 6,533.843 million; net income from operations after excise duty was Rs. 5,707.567 million.

• Finance charges fell to Rs. 105.609 million from Rs. 177.922 million; interest on fixed-period loans declined to Rs. 66.499 million from Rs. 131.621 million.

• Proposed dividend was 45% (Rs. 4.50/share), with total outgo including dividend tax of Rs. 156.950 million; distribution equaled 51% of PAT versus 47% in FY04.

Outlook and guidance

• FY06 electrical-cable outlook was positive, supported by stable and market-accepted raw-material prices, lower customs duties, VAT rollout, construction, auto and industrial growth, and rising electrical-goods demand.

• Communication-cable growth was expected to continue on broadband, LAN, optic-fibre and coaxial demand; FY06 BSNL tender was 12,000 TCKM, with an order of 1,200 TCKM expected.

• Switches were planned for launch in Q3 FY06, initially targeting mass/rural and up-market modular segments; investment was described as modest and funded through internal accruals.

• Urse JFTC capacity conversion for high-end communication and light-duty electrical cables was expected to finish by December 2005; planned capital expenditure was nominal and internally funded.