Huhtamaki India (509820) Q4 2007 earnings summary

Executive summary

• 2007 net sales rose 13.8% to Rs. 5,705.9 million, while EBDIT edged up to Rs. 675.5 million; higher depreciation and input costs pressured operating profit and net income.

• Strategic capacity projects were commissioned, and NASP initiatives contributed over 30% of annual sales; management expected improved underlying performance in 2008 despite near-term margin pressure.

Financial highlights

• Gross sales rose to Rs. 6,432.7 million from Rs. 5,795.7 million; net sales increased to Rs. 5,705.9 million from Rs. 5,012.0 million.

• EBDIT was Rs. 675.5 million vs. Rs. 661.9 million; EBIT fell to Rs. 386.9 million from Rs. 431.2 million, and PBT before exceptional/extraordinary items declined to Rs. 369.6 million from Rs. 428.2 million.

• PAT was Rs. 283.7 million vs. Rs. 399.4 million; 2006 included a Rs. 120.8 million flood-insurance gain, while 2007 included a Rs. 31.8 million excise-duty charge.

• EPS including exceptional and extraordinary items was Rs. 4.53 vs. Rs. 6.37; EPS excluding those items was Rs. 4.89 vs. Rs. 5.35.

Outlook and guidance

• 2008 capex was planned at Rs. 357 million, supported by operating cash flows; strategic plans targeted higher capacity and capabilities over the next two years.

• Management was cautiously optimistic about improved underlying financial performance in 2008, while expecting near-term margin pressures and maintaining a positive long-term outlook.

• The Thane reconstruction was expected to begin production from mid-2008; the new ERP system was scheduled for phased implementation later in 2008.