United Spirits (UNITDSPR) Q4 06/07 earnings summary

Executive summary

• FY07 sales exceeded 66 million cases; operating profit rose about 400% YoY, supported by Shaw Wallace integration, premium-brand growth and cost control.

• May 2007 acquisition of Whyte & Mackay for GBP 595 million enterprise value added a major Scotch platform; Bouvet-Ladubay expanded wine operations.

Financial highlights

• Consolidated gross sales Rs 47,646.449 million; after excise, Rs 26,778.797 million, versus Rs 35,400.085 million and Rs 18,993.646 million in FY06, respectively.

• Consolidated PBT Rs 7,156.563 million and net profit Rs 5,669.523 million; diluted EPS Rs 68.40 versus Rs 16.38 in FY06.

• Standalone operating profit Rs 3,898.186 million versus Rs 921.192 million; PAT Rs 4,940.194 million versus Rs 420.198 million; EPS Rs 52.20 versus Rs 4.80.

• Consolidated exceptional and other non-recurring credit Rs 3,134.686 million, including Rs 2,473.735 million surplus from sale of treasury shares and Rs 330.212 million contingency provision released.

Outlook and guidance

• First-half current-year profits were 51% above the corresponding FY07 period; directors expected continued profitable growth, barring unforeseen circumstances.

• Uptrading and growing demand for Scotch support Whyte & Mackay's strategic role as a blending-material source and a platform for blended and single-malt offerings.

• Molasses prices showed signs of continued softening, expected to benefit current-year operations; increased diversion of spirit to fuel ethanol remained a countervailing pressure.