Voltas, a premier engineering solutions provider and project
specialist, reported very weak results operationally in the first quarter of
FY13. But the bottomline met expectations due to higher other income and lower
tax expenses while revenues were higher than expectations.
Consolidated net profit went down by 40% year-on-year to Rs
79 crore during the quarter. Analysts on an average had expected at Rs 72
crore.
Other income in the first quarter almost doubled to Rs 35
crore (from Rs 19 crore) while tax expenses declined 46% year-on-year.
Consolidated total income rose by 20% to Rs 1,617 crore from
Rs 1348 crore during the same quarter, which was ahead of expectations of Rs
1,418 crore.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) fell by 14% YoY to Rs 94 crore. Consolidated EBITDA margin was down by
230 bps to 5.8% in the June quarter versus 8.1% in a year ago period, which was
quite lower than expectations of 7.2%.
Voltas is facing significant input cost pressures, which was
worsened by the rupee depreciation and execution of low margin orders.
Order book for the electro-mechanical projects (EMP) segment
was flat YoY at Rs 4,574 crore as against Rs 4,553 crore.
Management has not given outlook on order inflows. However,
order book position indicated that new inflows have remained tepid this quarter.
Analysts believe the order inflow cycle for the industry
will take atleast 1-2 quarters to recover.
Increase in consumer business (UCP) revenues by 34% in the
quarter indicated some respite for Voltas in the domestic market.
Standalone performance was robust and healthy for the
company, which indicated domestic market remains upbeat, but challenges
continue with two subsidiaries of Voltas.
Profit after tax for last year needs to adjust for
exceptional items of Rs 81.5 crore pertaining to transfer of company’s material
handling business to a joint venture.
After adjusting for this, the last year’s PAT stood at
around Rs 77 crore. Adjusted profit after tax for the quarter rose by 1.3% to
Rs 78 crore from Rs 77 crore YoY.
Raw material cost went up by 38% YoY to Rs 991 crore.
Inventories have also increased to Rs 38 crore as against liquidation of Rs 38
crore.
Segmental analysis
Electro-Mechanical Projects (EMP contributes 45-50% to
total revenues)
Revenues of this segment increased 10% YoY to Rs 741 crore
while EBIT margin was flat at 4.5%.
Margins were impacted by weak execution, cost overruns and
low carry forward of orders.
Unitary Cooling Segment (UCP accounts for 40-45% of
revenues)
Revenues of UCP rose by 34% YoY to Rs 754 crore while its
EBIT margin declined 290 basis points to 8.4% due to inability of the company
to pass on input cost pressures, rupee depreciation versus Chinese Yuan and
high ad-spends due to peak sales season.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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