Linde India (523457) Q4 99/00 earnings summary

Executive summary

• The 18-month period ended 31 Mar 2000 recorded a Rs 794.4m loss, reflecting excess gas supply, weak demand, tight merchant-market margins and the Jamshedpur plant’s depreciation and interest burden.

• Restructuring, cost control and higher-value products were central to the recovery plan; cash profits had begun in recent quarters, but business profits were expected to take another 2–3 years.

Financial highlights

• Revenue was Rs 3,978.2m for 18 months, up 68% YoY; annualized revenue increased 27% and volume rose 44% versus 1998, excluding the divested healthcare business.

• Net loss was Rs 794.4m, including Rs 402.2m in one-off provisions and Rs 122.5m in separation and terminal payments.

• Depreciation of Rs 381.3m and net interest of Rs 398.6m weighed on results following commissioning of the 1,290 tpd Jamshedpur plant.

• Capital expenditure was Rs 140.3m, versus Rs 653.9m in 1997–98; no dividend was recommended for the period.

Outlook and guidance

• Production at the Jamshedpur plant was expected to exceed original estimates, while depreciation, interest and lower-margin TISCO contract supply were expected to pressure the bottom line.

• Improving steel, ship-breaking, scrap-processing and re-rolling activity was expected to support performance; management targeted higher sales and margins, better asset utilization and lower costs.

• Argon, Argoshield, Nitrous Oxide, specialty and medical gases, Oxygen Concentrators, the Hikal pipeline grid and the relocated 120 tpd plant were expected to support profitable growth.