SKF India (500472) Q4 97/98 earnings summary

Executive summary

• FY1997-98 sales fell 10% to Rs 362 crore; profit after tax declined 80% amid recession, price cuts and lower domestic bearing volumes.

• Market share increased with several automotive manufacturers; sole-supplier positions and self-certification awards strengthened customer relationships.

Financial highlights

• Net sales were Rs 362.23 crore versus Rs 399.53 crore; operating profit was Rs 31.54 crore versus Rs 81.84 crore.

• Profit before tax was Rs 8.90 crore versus Rs 58.65 crore; profit after tax was Rs 5.90 crore versus Rs 29.28 crore.

• EPS was Rs 23.44; proposed dividend was 10% versus 40% for FY1996-97.

• Domestic bearing sales volume declined 6%, total sales value fell 10%, and profit after tax declined 80% YoY.

Outlook and guidance

• Price and margin pressure was expected to continue in FY1998-99; the VRS cost would depend on employee participation, with continuing cost savings expected thereafter.

• A Pune production line for HUB bearing units was planned to meet demand from TELCO and other customers; Maruti was expected to consider HUB units for its cars.

• The VRS was open during June 1998, excluding the Bangalore plant; net cost after related savings was to be reflected in FY1998-99 statements.