Timken India (522113) Q4 2007 earnings summary

Executive summary

• FY 2007 net sales rose 3% to ₹34,800 lakhs; PBT fell 5% to ₹5,609 lakhs as higher input costs, especially steel, pressured margins.

• Domestic demand and production growth offset weaker exports; production of equivalent bearings increased 21% without substantial capacity investment.

Financial highlights

• Net sales ₹34,800 lakhs vs ₹33,874 lakhs in 2006; domestic sales increased 11% to ₹237 crore, while exports declined 12% to ₹111 crore.

• PBT ₹5,609 lakhs vs ₹5,875 lakhs; PAT ₹3,740 lakhs vs ₹3,813 lakhs; EPS ₹5.87 vs ₹5.98.

• Net interest expense declined 28% to ₹77 lakhs, attributed to improved receivables management.

• Services income rose to ₹1,491 lakhs from ₹1,198 lakhs; other income was ₹921 lakhs, including ₹291 lakhs profit on investment sales.

Outlook and guidance

• Export trends did not indicate marked improvement in 2008; management cited ongoing US auto weakness and rupee strength.

• A 2008 cross-functional initiative was planned to map and redesign core processes for SAP implementation; the project was characterized as costly but necessary for future growth.

• Significant selling-price increases were seen as necessary to protect margins from rising input costs.

• Strong economic fundamentals and infrastructure growth were expected to support more aggressive automotive and infrastructure expansion over time.