Welspun Corp (532144) Q4 04/05 earnings summary

Executive summary

• FY2004-05 marked rapid growth and expansion; higher steel and freight costs pressured profitability despite stronger sales and international demand.

• Anjar expansion, the EWPCIL merger and new product capabilities positioned the business to pursue larger global pipeline projects.

Financial highlights

• Sales and services were Rs 10,384.88m, up 25.47%; year-on-year comparison is not comparable due to the EWPCIL merger.

• PAT was Rs 338.30m versus Rs 719.77m; PBIDTA was Rs 945.67m versus Rs 1,570.58m, with comparisons affected by the merger.

• PBT was Rs 501.30m; exports rose to Rs 7,050.11m from Rs 3,957.31m.

• Steel costs and freight weighed on earnings; ship-chartering expenses were Rs 1,212.61m before Rs 672.66m subletting income.

Outlook and guidance

• FY2005-06 turnover was expected to more than double as Anjar capacity came on stream; LSAW facilities were expected to start in H2.

• Outstanding order book was Rs 17,000m; much of existing and newly commissioned capacity was booked for FY2005-06.

• A separate outlook cited an order book of ~US$400m for FY2006 and shortlisting for over 2m tonnes of prospective orders.

• Long-term ambition: rank among the world’s top three pipe-industry players, with greater focus on North America and high-value products.