Gillette India (507815) Q4 00/01 earnings summary

Executive summary

• FY2001 focused on restructuring, productivity and freeing working capital amid an economic slowdown; grooming brands strengthened market share.

• Reported net loss of Rs. 27.79 crore reflected a one-time Rs. 60.64 crore charge related to closing the Duracell plant at Manesar.

• Management expected a return to profitability in 2002, supported by corrective actions, marketing investment, cost reduction and improved asset use.

Financial highlights

• Sales revenue fell 4% to Rs. 495 crore from Rs. 517 crore, primarily due to trade destocking and lower traded Braun and Oral Care sales.

• Profit before extraordinary items and tax was Rs. 18.70 crore, versus Rs. 22.62 crore in FY2000; reported loss before tax was Rs. 41.94 crore.

• Net loss after tax was Rs. 27.79 crore, compared with net profit of Rs. 26.42 crore in FY2000.

• Recommended dividend increased to Rs. 2.25 per share, despite the reported loss, based on underlying business fundamentals.

Outlook and guidance

• Management expected to be virtually debt-free by the end of FY2002, following debt repayment using the capital grant.

• Directors expected a return to profitability and strong profit gains in 2002, citing FY2001 corrective measures and focus on marketing, costs, productivity and asset management.

• Q1 2002 showed a positive trend in grooming; the Rs. 5 crore consumer promotion and FIFA World Cup sponsorship were expected to support upcoming sales.

• Successful trade destocking was expected to support stronger demand-pull sales in the coming year.