Gillette India (507815) Q4 02/03 earnings summary

Executive summary

• 2003 marked a turnaround after restructuring and the Geep battery business divestiture: net profit rose 594% YoY, while net sales from continuing businesses grew 25%.

• Stronger sales, profitability programs, cost management and asset and inventory controls supported a Rs 94 crore cash surplus; management described the business as debt-free.

Financial highlights

• Net sales were Rs 36,307.30 lakh versus Rs 38,303.59 lakh in 2002; continuing-business sales grew 25% after the Geep divestiture.

• PBT rose to Rs 7,469.69 lakh from Rs 1,745.03 lakh; PAT increased to Rs 4,481.66 lakh from Rs 645.71 lakh, up 594% YoY.

• Profit before interest, exceptional items and depreciation increased 71.83% to Rs 98.53 crore from Rs 57.34 crore; PBT was 21% of net sales.

• Total expenditure fell 17.63% to Rs 279 crore from Rs 339 crore, despite advertising and promotion spending rising 39%.

• Net cash from operating activities was Rs 7,362.58 lakh; cash and bank balances at year-end were Rs 10,742.46 lakh.

Outlook and guidance

• Early 2004 sales trends were healthy across grooming, toiletries, batteries and oral care; Vector Plus continued to post strong sales growth.

• Management expected sustained sales growth to improve current-year profitability and aimed to expand share through state-of-the-art products positioned as value for money.

• Management cited economic strength, rising consumer spending, lower import duties and modern retail development as growth opportunities.