Hawkins Cooker (508486) Q4 02/03 earnings summary

Executive summary

• New sales policy slowed the pressure-cooker volume decline to 3.4% YoY from 19% in 2001-02; total income fell 4.9%, and the after-tax loss widened to Rs 69.1m.

• Direct dealers increased 55% to 2,490; policy adjustments for wholesalers in the current year were welcomed, with management targeting renewed growth and a return to profits.

Financial highlights

• Net sales were Rs 1,083.5m, down 6.0% YoY; total income was Rs 1,105.7m, down 4.9%.

• Net loss after tax widened to Rs 69.1m from Rs 20.6m; loss before tax was Rs 78.4m, versus Rs 32.2m.

• Total expenses declined to Rs 702.5m from Rs 796.5m; materials cost was Rs 465.5m, versus Rs 381.7m, as finished goods and work-in-progress stocks fell.

• Personnel costs fell to Rs 196.8m from Rs 207.9m; advertising declined to Rs 90.8m from Rs 116.1m, and excise duty to Rs 96.0m from Rs 152.2m.

• Exports rose 2.8% by FOB value to Rs 75.6m; foreign exchange used fell to Rs 20.4m from Rs 26.2m.

Outlook and guidance

• Pressure-cooker market growth of 4%-5% annually was expected from the current year, conditional on a fairly normal monsoon; lower consumer prices were expected to support volumes if aluminium suppliers restrained prices.

• Management viewed the outlook as good, citing low household penetration, replacement demand and a strong competitive position; actual results could differ from its forward-looking assessments.

• Cookware supply was being expanded to address product shortages that constrained growth; advertising policy was under reassessment, with benefits expected in current and future years.