Godrej Consumer Products (GODREJCP) Q4 01/02 earnings summary

Executive summary

• First year of focused FMCG operations after the consumer-products demerger; sales grew despite weak domestic conditions, with market-share gains across most categories and reported PBT of Rs63.2 crore and PAT of Rs42.0 crore.

• Brand strength, wider distribution, cost discipline and supply-chain efficiency supported performance; return on capital employed was 89.6% and EVA was Rs30.1 crore.

Financial highlights

• FY01/02 sales were Rs514.2 crore, up 10% from Rs468.4 crore; total income was Rs522.1 crore.

• PBDIT was Rs77.1 crore, PBIT Rs67.7 crore, PBT Rs63.2 crore and PAT Rs42.0 crore; EPS was Rs7.02 per Rs4 share.

• Godrej brand sales rose 8.9% to Rs442.9 crore from Rs406.6 crore; contract manufacturing fell 13% to Rs54.1 crore, partly offset by Rs6.3 crore from processing operations.

• Reported operating margin was 15% and net profit margin 8.2%; EVA was Rs30.1 crore at an 18% weighted average cost of capital.

Outlook and guidance

• FY02/03 plans assume continued industrial and FMCG-sector weakness, with no significant improvement in market conditions; a recovery in rural demand could follow stronger agriculture.

• Growth plans include further market-share gains, wider distribution, new product launches and entry into categories synergistic with the existing network.

• Operational priorities include improving supply-chain efficiency, controlling costs, reducing debt and interest expense, and growing through related opportunities and potential acquisitions.