UPL (UPL) Q4 98/99 earnings summary

Executive summary

• Subsidiary results were mixed: Search Chem incurred a sharp loss amid weak chlor-alkali markets and financing costs, while Enviro Technology, Zambia, Australia and several trading subsidiaries reported profits.

• Search Chem’s management cited new specialty-chemical capacity, improved chlor-alkali pricing and export growth as potential recovery drivers; U.K. operations remained loss-making and in breach of banking covenants.

Financial highlights

• Search Chem revenue was Rs. 1,333,731,848 in FY98/99; net loss was Rs. 490,014,099 versus Rs. 305,538,964 in FY97/98, with interest expense rising to Rs. 417,636,911 from Rs. 280,890,704.

• Enviro Technology sales and services rose 16% to Rs. 67.66m; profit after tax increased 77% to Rs. 4.29m, with EPS of Rs. 3.57.

• Bio-Win turnover was US$20.37m and profit on ordinary activities US$2.74m; after a US$2.5m dividend, profit for the year was US$235,657, with EPS of US$39.08.

• Zambia turnover rose to K1,540,349,237; net profit after tax increased to K32,365,421 from K11,813,846.

• Australia recorded sales of A$3,037,373, gross trading profit of A$950,542 and net profit after tax of A$89,103; Mexico reported net profit of 1,180,434 in its presented currency, down from 1,467,137.

Outlook and guidance

• Search Chem expected improvement in FY99/00, citing recent Caustic Soda and Chlorine price recovery, new specialty-chemical facilities, better power-plant utilisation and export growth.

• Search Chem expected its elemental-phosphorus plant to begin production in about a month and forecast good export growth after FY98/99 specialty-chemical exports of Rs. 974.48 lacs.

• Zambia management expected higher sales in coming years; Mexico anticipated continued sales growth in agricultural products and Russia expected profits to improve after a loss attributed to exceptional items.