West Coast Paper Mills (500444) Q4 06/07 earnings summary

Executive summary

• FY07 net profit more than doubled to Rs66.46 crore from Rs32.03 crore; paper production rose 2% and paper turnover increased 6.9% YoY.

• A Rs1,100-crore expansion and modernisation programme is underway, targeting capacity growth from 1,63,750 to 3,20,000 TPA; benefits are expected in 2009-10.

Financial highlights

• Gross profit rose 38% to Rs95.52 crore from Rs69.22 crore; net profit increased 108% to Rs66.46 crore from Rs32.03 crore.

• Sales were Rs613.49 crore versus Rs595.15 crore; total income was Rs619.55 crore versus Rs611.02 crore.

• EPS increased to Rs74.34 from Rs35.82; the prior year included Rs17.80 crore of additional depreciation for the Duplex Board Division.

• Cash accruals helped reduce borrowings and interest charges; interest and financing charges fell to Rs4.77 crore from Rs9.47 crore.

• Other income included Rs5.72 crore profit on fixed-asset sales; this was a non-recurring item in FY07 results.

Outlook and guidance

• Paper production in Q1 FY08 was 44,093 MT versus 43,589 MT a year earlier; results were expected to improve further, barring unforeseen circumstances.

• Expansion is scheduled for commissioning within two years, with operational benefits expected in 2009-10; expected gains include lower pulp, power and fuel costs and improved margins.

• OFC demand was projected to grow 30% in the current year to over 3 million FKM; order visibility was described as good, with export-market development continuing.