SKF India (500472) Q4 03/04 earnings summary

Executive summary

• 2004 was a record year, supported by a strong economy and automotive demand, alongside close customer support amid rising steel prices and irregular material availability.

• Strategic shift from a bearings-focused products business toward integrated customer solutions across bearings, seals, lubrication systems, mechatronics and services.

Financial highlights

• Net sales and services were Rs 5,813.1 million vs Rs 4,668.7 million; total revenue including miscellaneous income was Rs 6,050.0 million vs Rs 4,892.2 million, with total revenue up 24% YoY.

• Net profit was Rs 566.1 million vs Rs 322.0 million, up 76%; reported profit before tax was Rs 883.3 million vs Rs 506.3 million.

• Profit before tax excluding the Rs 20.0 million impairment-provision reversal was Rs 863.3 million; net interest expense fell to Rs 5.4 million from Rs 49.1 million.

• Operating cash flow was Rs 670.1 million vs Rs 714.6 million; cash and bank balances closed at Rs 1,007.0 million vs Rs 576.5 million.

Outlook and guidance

• For 2005, management expected higher demand across industries, supported by vehicle sales, the previous year's good monsoon and healthy economic growth; this could support improved profitability and margins.

• Growth plans emphasized faster expansion and a larger contribution from seals, services, lubrication systems and mechatronics over the next three years.

• Priorities included stronger operating margins, balance sheet and cash flow; customer-led innovation, global workforce integration and Six Sigma continuous improvement.