United Spirits (UNITDSPR) Q4 08/09 earnings summary

Executive summary

• FY09 volume growth was 20%; standalone profit after tax was Rs.2,966.6m, down from Rs.3,112.8m, despite input-cost increases exceeding Rs.3.5bn.

• Consolidated results included the Whyte & Mackay business and amalgamations; the reported net loss was Rs.4,084.1m, versus net profit of Rs.2,720.6m in FY08.

• Shaw Wallace, Primo and Zelinka amalgamations were reflected from the April 1, 2007 appointed date; FY09 comparisons are not like-for-like.

Financial highlights

• Standalone gross sales were Rs.71,130.8m and excise duty Rs.33,654.2m; net sales were Rs.37,476.6m versus Rs.28,441.8m in FY08.

• Standalone operating profit was Rs.4,953.2m versus Rs.5,175.8m; PBT was Rs.4,591.6m versus Rs.4,849.7m, and PAT was Rs.2,966.6m versus Rs.3,112.8m.

• Consolidated net sales after excise were Rs.50,541.4m; consolidated net loss was Rs.4,084.1m versus profit of Rs.2,720.6m in FY08.

• Consolidated interest and finance charges were Rs.7,377.3m versus Rs.5,880.8m; reported loss before tax was Rs.3,168.9m versus profit before tax of Rs.5,673.3m.

Outlook and guidance

• IMFL industry growth was expected to remain double digit for several years, supported by new legal-age consumers and uptrading from country liquor.

• Higher throughput, cost controls and efforts to secure price increases were intended to offset input inflation and government buying agencies’ reluctance to approve price rises.

• Debt reduction plans followed a treasury-share sale that raised ~US$186m; lower interest costs were expected in coming years.

• A potentially weak monsoon was flagged as a risk to spirit supply and prices; reduced industrial alcohol demand partly offset supply pressure.