GE Vernova T&D India (522275) Q4 2010 earnings summary

Executive summary

• FY2010 net sales rose 12.7% YoY to Rs 40,200,358 thousand despite a shrinking Indian T&D market and delayed customer projects.

• Operating profit before interest fell to Rs 3,471,235 thousand from Rs 3,576,638 thousand; PAT declined to Rs 1,867,413 thousand from Rs 1,920,026 thousand, reflecting price pressure and greenfield ramp-up costs.

• Order backlog increased 2% YoY; market leadership in T&D was retained for a third consecutive year.

Financial highlights

• Net sales: Rs 40,200,358 thousand vs Rs 35,658,766 thousand in 2009; reported growth 12.7%.

• Operating profit before interest: Rs 3,471,235 thousand vs Rs 3,576,638 thousand; margin 9.0% vs 10.0%.

• Profit after interest: Rs 2,816,224 thousand vs Rs 2,998,040 thousand; PAT: Rs 1,867,413 thousand vs Rs 1,920,026 thousand.

• Basic and diluted EPS fell to Rs 7.81 from Rs 8.03; recommended dividend was 90%, or Rs 1.80 per share.

• Operating cash flow was Rs 1,075,356 thousand vs Rs 2,278,699 thousand; net cash declined Rs 129,273 thousand during 2010.

Outlook and guidance

• T&D demand was expected to grow in 2011 as government infrastructure and industry investment increases; new greenfield sites and expanded capacity positioned operations to pursue growth.

• The 12th Plan was expected to add around 100,000 MW of generation capacity, supporting 765 kV and UHV transmission investment; a 1200 kV market was emerging.

• Higher interest rates, project delays, aggressive imports and EPC pricing were identified as near-term constraints on revenue and profitability.