Galaxy Surfactants (GALAXYSURF) Q4 06/07 earnings summary

Executive summary

• FY07 net sales rose 19.71% YoY to Rs.32,270.90 lakh; net profit increased to Rs.2,524.10 lakh from Rs.566.43 lakh.

• Growth reflected strategic customer additions, improved margins, higher capacity utilization, softer major feedstock prices and lower interest costs.

• Total dividend paid/proposed was 50%, or Rs.5 per Rs.10 share, including 15% interim and 35% recommended final dividend.

Financial highlights

• Net sales were Rs.32,270.90 lakh versus Rs.26,957.00 lakh; gross profit before interest and depreciation reached Rs.5,008.56 lakh versus Rs.2,863.68 lakh.

• PBT rose to Rs.3,192.88 lakh from Rs.900.19 lakh; PAT was Rs.2,524.10 lakh versus Rs.566.43 lakh.

• Interest and finance charges fell to Rs.709.94 lakh from Rs.881.41 lakh; depreciation was Rs.1,105.74 lakh versus Rs.1,082.08 lakh.

• Operating cash flow was Rs.3,386.94 lakh, while cash and cash equivalents closed at Rs.109.65 lakh versus Rs.148.62 lakh.

Outlook and guidance

• Home and Personal Care demand was expected to sustain its 2006-07 growth momentum in 2007-08; rising consumer incomes and retail-chain expansion were viewed as growth opportunities.

• Strategy prioritized specialty products, deeper customer relationships, supplier/customer business arrangements, capacity scaling and broader geographic reach.

• Management was considering substantial capex over the next three years and potential funding options, including broadening the equity base.