HEG Advanced Materials (HEGAM) Q4 04/05 earnings summary

Executive summary

• FY05 delivered stable operating performance as stronger graphite-electrode realizations and sponge-iron earnings offset weak hydel generation and a first-half waste-heat recovery turbine issue.

• Net sales increased 18.2% YoY to ₹455.03 crore; net profit fell to ₹41.15 crore from ₹51.02 crore, with EPS at ₹10.21 versus ₹12.66.

Financial highlights

• Net sales ₹455.03 crore, up from ₹384.83 crore; exports ₹259.77 crore versus ₹235.36 crore, and domestic revenue ₹258.81 crore versus ₹228.53 crore.

• PBIDT ₹84.30 crore versus ₹87.71 crore; PBT ₹49.61 crore versus ₹60.64 crore; PAT ₹41.15 crore versus ₹51.02 crore.

• Interest expense rose to ₹10.36 crore from ₹7.72 crore, while depreciation increased to ₹24.32 crore from ₹19.35 crore.

Outlook and guidance

• Graphite-electrode production was fully booked for calendar 2005; management cited positive pricing and demand, with improved performance expected as expanded capacity enters commercial production.

• The 52,000 MT/year graphite-electrode capacity was expected to be commissioned commercially in Q1 FY06; a further expansion to 64,500 MT/year was planned after stabilization.

• The 100,000 MT/year steel-billet project was progressing on schedule for completion in Q2 FY06; the outlook for graphite electrodes and sponge iron remained positive.