Triveni Engineering & Industries (TRIVENI) Q4 06/07 earnings summary

Executive summary

• 18-month period ended Sep 30, 2007; large sugar and engineering capacity expansions supported growth, but weak sugar economics drove lower reported profit.

• Engineering growth and cogeneration partly offset sugar losses, while the new distillery and rural retail operation added growth opportunities.

Financial highlights

• Net turnover Rs 19,072.4m; EBITDA Rs 2,400.0m; PBT Rs 785.2m and PAT Rs 754.3m for 18 months, versus 12-month comparatives of Rs 11,920.4m, Rs 2,130.0m, Rs 1,611.8m and Rs 1,315.0m.

• EPS Rs 2.92 for 18 months, not annualized, versus Rs 5.88 for the prior 12 months; reported PAT declined 43%.

• Depreciation and amortization Rs 862.7m and finance cost Rs 730.7m; both rose with completed expansions, asset capitalization and project borrowings.

• Operating cash flow Rs 2,879.0m; fixed-asset and intangible-asset purchases Rs 7,767.1m; cash flow from financing Rs 4,947.4m.

Outlook and guidance

• FY08 cane crush expected to rise ~30%, with all sugar units running at full capacity; better margins depend partly on a favorable outcome to the SAP court case.

• Engineering businesses expected to sustain growth; turbine order book Rs 4.68bn as of Oct 1, 2007, ~85% of estimated FY08 product revenue.

• Cogeneration off-season operation expected to exceed 100 days in FY08; distillery utilization should improve with higher molasses availability and ethanol tenders.

• Global sugar fundamentals expected to improve in 2008-09 as lower production could ease surplus stocks and support prices.