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Analyst Meet / AGM - Analyst Meet

Guided for 12-15% revenue growth and operating margin improvement by 60-100 bps

UPL

28-Apr-2015, 01:17
UPL held an analyst meet for discussing quarter and year ended March 2015 result. The top management addressed the meet.
Highlights of the call:

The consolidated net sales for Q4 FY15 grew by 9% to Rs 3624.33 crore. Sales growth excluding other operation income was led by 18% volume growth while price decreased by 2%. The exchange impact was -8%. The standalone net sales increased 8% to Rs 1287.65 crore. The OPM increased by 156 bps to 21.7% due to decrease in raw material cost and other expenses. The PBT before EO was up by 11% to Rs 509.53 crore due to increase in OPM. The consolidated net profit inclined by 22% to Rs 440.06 crore. The standalone net profit inclined by 123% to Rs 75.74 crore

For Q4, Latin America revenue grew by 29% to Rs 909 crore. Unizeb Gold (Asian rust disease in soya) performed well during the quarter. Brazilian market was impacted due to subdued crop prices for key crops. Mexico market showed good growth on the back of new product launches. Alarming import restrictions / delays in Argentina due to devaluation and lower forex reserves

For Q4, North America revenue grew by 9% to Rs 861 crore driven by increase in soya, rice and groundnut acreages which compensated for lower corn acreages. New product launches - Lifeline and Satellite helped drive growth in key segments. The company is expanding in Mid-West with new products. Post-harvest segment performed well especially on account of apple.

For Q4, the rest of world revenue grew by 13% to Rs 648 crore driven by faster growth in Philippines (banana) and Indonesia (rice). New herbicide (Glufosinate) supported growth mainly in Asia. Australian business showed improvement in FY15. Growth in the African market driven by new product registrations.

For Q4, there was decline in Europe revenue by 10% to Rs 805 crore led by adverse currency movement. Volume and price led growth for FY15 stood at 5% which was adversely impacted by 4.2% on account of adverse exchange movement. Growth was driven by good harvest of wheat potato, sugar beet aided by favorable weather conditions. Copper and Sulphur based portfolio performed well. Export ban to Russia affected potato and fruits and added to price pressure. Russia and Ukraine business affected by sanctions and unfavorable trading conditions

Revenue growth for FY15 stood at 17% aided by good performance of recent launches Ulala, Lancer Gold, Starthene Power, Saaf, Saathi.

The company continues to focus on new product launches across geographies to drive growth. The mgmt highlighted the upcoming opportunity to the tune of US$ 5 bn on account of patent expiries of products in the next five years. In the next three years, the company plans to launch 69 active ingredients, which would lead to 567 country launches of various formulations. The company is targeting an innovation index of higher than 15% over the next three years.

The mgmt said that in the growth markets it would continue to focus on India and Brazil while it will focus on improving penetration in untapped markets of Africa and China.

The mgmt said that subdued crop prices are making the farmers down-trade to low-priced products, a need which is addressed by the company

Chemical units in China are increasingly facing pressures on EHS on account of tightening environment protection norms. Further, increase in labour cost and uncertainty on supplies from China helped India improve its relative competitiveness. The company is looking to up plants for AI and formulation manufacturing in India along with Europe and America to be closer to the markets

The company generated Rs 1590 crore of operating cash (PAT + depreciation), which was used in the following manner:- Rs 530 crore incremental investments into working capital and other receivables; capex of Rs 800 crore; Rs 250 crore investment into subsidiaries; and repayment of debt of Rs 175 crore and dividend payment of Rs 172 crore.

The company received a total of 187 registrations during the year across various geographies

The company's gross debt is ~ Rs 2800 crore. Capex for FY15 including new registrations and acquisitions stood at Rs 1000 crore.

The company will do $ 100 - 150 mn capex per annum.

The mgmt continues to guide for 12-15% revenue growth led by volumes and operating margin improvement by 60-100 bps. Working capital to remain in the band of 90-105 days.

The mgmt has target of achieving $ 4 bn sales in next 4 years.