GMM Pfaudler (505255) Q4 97/98 earnings summary

Executive summary

• FY98 sales fell 29% YoY and net profit fell 44% amid a severe recession, delayed chemical projects and intense local competition; cost reduction and export growth were key responses.

• Exports generated Rs. 36.4m, while new products including Chemineer Mixing Systems, PTFE products and Engineering Systems were promoted to support growth.

Financial highlights

• Sales and services were Rs. 366.858m vs Rs. 516.755m; operating profit Rs. 28.123m vs Rs. 78.935m; PBT Rs. 40.783m vs Rs. 83.610m.

• Net profit was Rs. 30.799m vs Rs. 55.848m; other income increased to Rs. 12.660m from Rs. 4.675m.

• Total assets rose to Rs. 411.011m from Rs. 370.761m; net current assets were Rs. 185.840m vs Rs. 122.441m.

Outlook and guidance

• Management expected recession to continue through 1998, alongside political uncertainty; the effects of international sanctions and the Asian economic crisis remained uncertain.

• Initiatives aimed to regain the 20% compound annual sales and profit growth achieved over the ten years through March 1996.

• Export activity with Pfaudler and promotion of new products were intended to generate additional revenue and help restore growth.