VST Industries (509966) Q4 04/05 earnings summary

Executive summary

• Consolidated profit after tax reached Rs.5,473.86 lakhs, versus Rs.2,912.01 lakhs in FY04; domestic cigarette volumes rose 9% after three years of decline.

• Focus on tobacco brands, cost control and working-capital management supported the turnaround; the final instalment of debentures was redeemed, leaving operations debt-free.

Financial highlights

• Consolidated net sales were Rs.35,602.70 lakhs, versus Rs.33,482.89 lakhs in FY04; PBT was Rs.9,387.10 lakhs, versus Rs.6,656.72 lakhs.

• Consolidated PAT was Rs.5,473.86 lakhs, versus Rs.2,912.01 lakhs; basic and diluted EPS was Rs.35.45, versus Rs.18.86.

• Consolidated operating cash flow was Rs.11,972.83 lakhs; cash and bank balances closed at Rs.3,072.40 lakhs.

• Proposed dividend was Rs.12.50 per share, including a Rs.6 Platinum Jubilee Dividend; stated dividend rate was 125%.

Outlook and guidance

• FY06 cigarette excise increases of about 10%, with other tobacco forms excluded, could intensify substitution and erode cigarettes’ share of tobacco consumption.

• Priorities were market-share gains, stronger presence in segments that add value to profitability, new-brand launches and distribution development.

• VAT’s ad valorem impact and entry taxes adopted in some states were flagged for monitoring; the Tobacco Bill had weakened industry communication channels, leaving point-of-sale activity.