United Spirits (UNITDSPR) Q4 03/04 earnings summary

Executive summary

• FY04 sales exceeded 25 million cases, up 18% YoY versus 14% industry growth; UB Spirits sold 38.2 million cases, ranking fourth globally by marketer volume.

• First-line product volumes grew 22% amid consumer down-trading, supporting a 31% share of the first-line segment for McDowell and a 46% share for the UB Spirits business.

Financial highlights

• Consolidated net income was Rs. 247.476 million versus Rs. 116.737 million in FY03; consolidated EPS rose to Rs. 4.78 from Rs. 2.26.

• Standalone revenue from operations was Rs. 16,513 million, up 13%; brand franchise fees were Rs. 875 million, representing estimated franchisee gross turnover of Rs. 7,242 million.

• Standalone PBIDT was Rs. 924.65 million versus Rs. 683.60 million; standalone PAT was Rs. 213.465 million versus Rs. 131.142 million.

Outlook and guidance

• IMFL demand outlook remained positive, supported by low per-capita consumption, changing attitudes, higher disposable income, and potential migration from unorganised country spirits to branded products.

• Higher spirit input costs were expected to pressure profits from Q2 FY05; price increases were being pursued in government and non-government markets to offset cost inflation.

• Franchising was positioned to capture lower-price growth with limited capacity and working-capital investment; country-liquor brand entry was under exploration.