Steel Authority of India (SAIL) Q4 06/07 earnings summary

Executive summary

• FY2006-07 delivered record turnover of Rs.39,189 crore, EBITDA of Rs.10,966 crore and PAT of Rs.6,202 crore, up 21%, 49% and 55%, respectively.

• Results reflected stronger steel demand and realizations, 114% capacity utilization, greater value-added sales and Rs.403 crore of cost savings.

• Modernisation and expansion plans target hot-metal capacity above 25 million tonnes by 2010, versus 14.6 million tonnes currently.

Financial highlights

• Turnover was Rs.39,188.66 crore versus Rs.32,279.75 crore; net sales were Rs.33,923.12 crore versus Rs.27,860.34 crore.

• EBITDA rose to Rs.10,966.23 crore from Rs.7,380.80 crore; PBT increased to Rs.9,422.62 crore from Rs.5,705.74 crore.

• PAT reached Rs.6,202.29 crore versus Rs.4,012.97 crore; EPS was Rs.15.02 versus Rs.9.72.

• Saleable steel production reached 12.6 million tonnes, up 4%; sales were 11.9 million tonnes, up 5%.

• Average price realization increased 14%, supported by improved prices and a higher share of value-added products.

Outlook and guidance

• Hot-metal output is targeted to exceed 25 million tonnes by 2010, with project completion accelerated from the earlier 2011-12 schedule.

• Modernisation is planned across integrated plants, Salem and mines; the overall expansion plan has an indicative cost above Rs.40,000 crore.

• Indian steel consumption is forecast to grow 9.1% in 2007, 7% through 2010 and 7.7% through 2015; domestic demand is expected to remain strong through 2011-12.

• Iron-ore demand is expected to rise to 40 million tonnes after expansion; Chiria, Rowghat and Taldih mine development is planned to support supply.

• A 2.2-million-tonne cement JV at Satna and Bhilai was formed, with commissioning expected by 2010.