TVS Motor Company (532343) Q4 05/06 earnings summary

Executive summary

• FY06 two-wheeler sales rose 15% to 1.34 million units; net sales were Rs.3,234.96 crore and PBT was Rs.168.45 crore.

• Profit declined YoY amid higher material costs and stricter emission norms; FY05 other income included a one-off Rs.36.94 crore deferred-sales-tax liability reduction.

Financial highlights

• Net sales rose to Rs.3,234.96 crore from Rs.2,875.91 crore; sales and other income totaled Rs.3,305.96 crore versus Rs.2,955.21 crore.

• EBITDA was Rs.275.48 crore versus Rs.290.87 crore; PBT was Rs.168.45 crore versus Rs.200.45 crore; net income was Rs.117 crore versus Rs.137.57 crore.

• EPS was Rs.4.93 versus Rs.5.79; export sales increased 48% to Rs.177 crore from Rs.120 crore.

• Consolidated net sales were Rs.3,266.85 crore, PBT Rs.166.16 crore, net income Rs.110.47 crore and EPS Rs.4.65.

Outlook and guidance

• Indian two-wheeler sales were expected to grow 15% in FY07; motorcycles forecast at +19%, mopeds +10% and ungeared scooters +8%.

• Two-wheeler production at the Himachal Pradesh facility was expected to begin in H2 FY07; three-wheeler commercial production was targeted for Q4 FY07.

• Indonesia facility’s initial capacity was planned at 120,000 vehicles annually, with commercial production expected in Q4 FY07.

• Raw-material prices were expected to remain firm in the short term; cost reduction, value engineering and global sourcing were planned to mitigate margin pressure.