Thermax (THERMAX) Q4 98/99 earnings summary

Executive summary

• FY1998-99 total income was Rs 5,076 million, down 4% YoY; net profit fell 15% to Rs 383 million amid weak investment demand and pressure on selling prices.

• Cost control on materials, receivables, inventory and interest helped sustain results despite subdued capital-equipment demand and delayed power-project financing.

• Long-term prospects were viewed positively, but recovery in orders was expected to reach the business mainly in Q4 FY1999-2000.

Financial highlights

• Total income Rs 5,076 million vs Rs 5,301 million in FY1997-98; reported decline 4% YoY.

• PBT Rs 498 million vs Rs 563 million; PAT Rs 383 million vs Rs 453 million, down 15% YoY.

• Interest and depreciation totaled Rs 148 million vs Rs 155 million; tax provision was Rs 115 million vs Rs 110 million.

• EPS was Rs 16.48; proposed equity dividend was 35% per share for FY1998-99.

Outlook and guidance

• Economic recovery indicators appeared in Q1 FY1999-2000, but excess industry capacity was expected to absorb initial demand; stronger orders were anticipated only in Q4.

• Current-year performance was expected to remain subdued, while long-term prospects remained strong and positive.

• Commercial and infrastructure demand were strategic growth areas; commercialization of 75 kW micro-turbines was expected in FY2000-2001 after beta testing.

• Two cogen projects of 103 MW and 35 MW had signed supply agreements, with financial closures still pending.