Finolex Cables (FINCABLES) Q4 96/97 earnings summary

Executive summary

• FY97 turnover and profit declined amid delayed Department of Telecommunications orders, provisional billing at 95% of prices, and lower copper prices; diversification into open-market and newer cable products continued.

• Jelly Filled Telephone Cables’ share of cable sales fell 8 percentage points to 53% as Light Duty Cable output grew and new LAN and Co-axial products entered market testing.

Financial highlights

• Turnover, inclusive of excise, was Rs. 4,805.67 million versus Rs. 5,140.51 million in FY96, down 6.5%; income from operations was Rs. 4,640.02 million versus Rs. 4,876.64 million.

• Profit before tax was Rs. 703.76 million versus Rs. 825.73 million; profit after tax was Rs. 483.76 million versus Rs. 551.03 million, down 12.2%.

• Depreciation rose to Rs. 151.92 million from Rs. 124.70 million; finance charges were Rs. 249.24 million versus Rs. 248.77 million.

• EPS was Rs. 26.8 versus Rs. 30.5; book value per share was Rs. 269 versus Rs. 248.

• Recommended dividend remained Rs. 5.50 per share, absorbing Rs. 99.29 million; Rs. 440 million was transferred to General Reserve.

Outlook and guidance

• Diversification aims to reduce reliance on Government orders through LAN and Co-axial Cables, higher Light Duty Cable sales, automobile cable orders, and increased Power Cable production for private power producers.

• A new DoT tender had been received, with orders expected to be finalized shortly and provide plant load for the remaining months of FY98; efforts also targeted private telecom operators.

• Market response to newer products was encouraging; management anticipated industrial and consumer demand recovery if lower interest rates, adequate funds, and greater external borrowing access supported an economic upturn.

• Plans included a third Goa unit for speciality and high-voltage power cables; the copper rod joint venture was expected to begin commercial production in October 1997.