Godfrey Phillips India (500163) Q4 98/99 earnings summary

Executive summary

• FY1998-99 ended with record turnover and profit; sales income grew 3.2% and profit after tax rose 21.6% to Rs 47.26 crore.

• Market share was maintained despite a nearly 2% contraction in cigarette industry volume; three new brands received positive consumer response.

• Strategy centered on product and corporate brand value, quality, manufacturing modernization, and improved distribution and customer service.

Financial highlights

• Gross revenue was Rs 106,249.04 lacs versus Rs 102,355.41 lacs; sales income grew 3.2% YoY.

• Profit before tax rose to Rs 6,808.13 lacs from Rs 5,934.92 lacs; profit after tax was Rs 4,726.13 lacs versus Rs 3,884.92 lacs.

• Excise duty was Rs 55,638.56 lacs, versus Rs 55,996.07 lacs; other income increased to Rs 1,531.91 lacs from Rs 895.19 lacs.

• Proposed dividend increased to Rs 12/share from Rs 10/share; total proposed dividend was Rs 1,247.85 lacs, plus Rs 137.26 lacs corporate dividend tax.

Outlook and guidance

• Management expected continued growth and investment value creation, supported by economic recovery, improved consumer purchasing power, and its association with Philip Morris.

• Three newly launched cigarette brands were expected to contribute to growth in following years; regional market focus and stronger distribution were intended to support favourable results.

• Tea business was expected to grow in the current year as the packaged market recovered after excise duty withdrawal, supported by distribution and brand-building investment.

• Directors expected tobacco exports to recover toward prior levels, with Andhra and Karnataka crops appearing promising and farm prices stable.