Godfrey Phillips India (500163) Q4 05/06 earnings summary

Executive summary

• FY 2005-06 turnover reached Rs 1,431 crore, up 11%; tobacco business growth exceeded the industry’s 6.3% growth despite regulatory and excise pressures.

• 2005-06 marked the fourth consecutive year of healthy growth.

Financial highlights

• Gross sales were Rs 1,431.87 crore vs Rs 1,295.70 crore; net sales after excise were Rs 682.96 crore vs Rs 612.74 crore.

• Net profit was Rs 60.13 crore vs Rs 63.60 crore; PBT before exceptional items was Rs 91.05 crore vs Rs 99.95 crore.

• EPS was Rs 57.82 vs Rs 61.16; proposed dividend rose to Rs 22.50 per share from Rs 22.

• Net exceptional gain was Rs 864.30 lakh, versus no exceptional item in the prior year.

Outlook and guidance

• A second Six Sigma wave was underway, with 35 projects and 12 Black Belts plus 23 Green Belts being trained; FY 2005-06’s first wave delivered annualised savings of ~Rs 3.5 crore.

• Plans included expanding Six Sigma across operations, upgrading financial and inventory management through ERP, and improving sales forecasting and planning.

• Efforts to raise unmanufactured tobacco exports through new contacts and agents were expected to support future export growth.

• Integration of tea distribution with cigarette distribution was expected to support higher tea turnover in coming years.