Timex Group India (500414) Q4 05/06 earnings summary

Executive summary

• FY ended 31 Mar 2006 returned to profitability, with PAT of Rs 11.501m versus Rs 7.256m; management cited higher-than-budgeted sales and expenditure savings.

• Growth was supported by organized retail sales and a Rs 68.1m non-refundable promoter grant; reported income was Rs 1,012.902m, up 11.31% YoY.

Financial highlights

• Net sales were Rs 867.637m versus Rs 774.681m; service income was Rs 37.237m versus Rs 40.342m.

• PBT rose to Rs 16.585m from Rs 7.256m; PAT was Rs 11.501m versus Rs 7.256m, after Rs 5.084m of fringe benefit tax.

• Interest expense declined to Rs 18.475m from Rs 20.196m; total expenditure rose to Rs 972.929m from Rs 853.686m.

• Net cash from operating activities was Rs 29.363m versus Rs 80.604m; closing cash and equivalents increased to Rs 311.360m from Rs 45.972m.

Outlook and guidance

• Management projected significant bottom-line growth from retail expansion, new in-house brands, feature-led products, new Himachal Pradesh facilities and internalization of fast-moving imported styles.

• Additional Himachal Pradesh manufacturing facilities were targeted for completion by Mar 2007; The Time Factory franchise plan aimed for more than 100 stores by 2008.

• Borrowing costs were expected to rise by 200 bps; planned mitigation included drawing on borrowing limits and improving cash flow to hold interest costs at the prior-year level.