Relaxo Footwears (RELAXO) Q4 04/05 earnings summary

Executive summary

• FY05 turnover rose 7.35% to Rs. 21,547.21 lacs; PAT fell to Rs. 372.31 lacs from Rs. 540.37 lacs, mainly due to depreciation on the new Tikri Border project.

• Operating profit before interest, depreciation and tax increased to Rs. 1,453.66 lacs, or 6.75% of sales, from Rs. 1,149.95 lacs, or 5.74%.

Financial highlights

• Total income was Rs. 21,671.69 lacs versus Rs. 20,164.76 lacs; total expenditure was Rs. 20,462.07 lacs versus Rs. 19,090.84 lacs.

• PBDT rose to Rs. 1,209.62 lacs from Rs. 1,073.92 lacs; PBT declined to Rs. 603.39 lacs from Rs. 738.37 lacs.

• Depreciation increased to Rs. 606.23 lacs from Rs. 335.55 lacs; PAT was Rs. 372.31 lacs versus Rs. 540.37 lacs.

• Cash flow from operations was Rs. 868.83 lacs versus Rs. 228.83 lacs; cash and cash equivalents ended the year at Rs. 416.60 lacs versus Rs. 361.74 lacs.

Outlook and guidance

• FY06 outlook remained positive, with confidence in better results and plans to use spare capacity at Bahadurgarh and Bhiwadi to increase production.

• Product range expansion, brand positioning, cost control and efficiency improvements were identified as responses to pricing pressure and potential market contraction.

• Lower natural rubber prices were expected to support further profitability improvement, while the outlook remained conditional on raw-material prices and market factors.