SKF India (500472) Q4 05/06 earnings summary

Executive summary

• FY 2006 was described as the best year to date, with net sales of Rs 13,424.9 million and profit after tax of Rs 1,019.6 million; DCD adoption makes the sales comparison with 2005 not strictly comparable.

• Growth reflected expansion across automotive and industrial markets, wider customer reach, and a shift to Direct Customer Delivery; bearings remained the core business.

Financial highlights

• Net sales and services were Rs 13,424.9 million, up 71.8% YoY; 2006 includes the full DCD effect versus the Direct Import Model in 2005.

• Operating profit before interest and tax was Rs 1,459.7 million, up 42.6%; PBT was Rs 1,531.4 million, up 48%, and PAT was Rs 1,019.6 million, up 59.1%.

• Basic and diluted EPS were Rs 19.34, versus Rs 12.21 in 2005.

• Export sales grew 43.8% and contributed 5.2% of sales; domestic sales grew 74%.

• Proposed dividend was Rs 4.50 per share, or 45%, versus Rs 3.50 and 35% in 2005; total payout was Rs 237.3 million before dividend tax.

Outlook and guidance

• Strong demand across user segments was expected to continue, supported by manufacturing growth, auto and auto-component expansion, capital investment and infrastructure development.

• Bearings were expected to decline from over 90% of revenue to below 80% over the coming years as seals, lubrication, reliability services, linear motion and actuation gained share.

• Planned priorities included customer partnerships, integrated solutions, factory optimization through Six Sigma and TPM, and continued investment in technology and employee development.

• 2007 sustainability initiatives targeted year-on-year CO2 reductions at factories through energy efficiency and other operational measures.