The company held its conference call on 11th Aug 2017 and was addressed by Mr. Ashok Goel MD
Key Highlights
EDG Germany, EBIT margin lower in June 17 quarter YoY because it has not improved as per what mgmt has expected. It has pulled overall Europe and Global margin down. The mgmt is working on debottlenecking, efficiency in production, Supply chain and, integration with rest of the world. EDG contributes around 9-10% in global revenue and 50% to Europe business.
In Europe exclude EDG - there is decline in top-line, while margin improved. EDG and rest of Europe should see improvement from Sep 17 onwards.
There were some extraordinary charges which impacted Europe margins. There is some royalty to be paid on machine which also impacted some margins during the quarter.
In America, Columbia market has stopped making losses and revenue has started moving up. Profit levels of Columbia have to come up as still cost part is there. In Mexico the growth and margin expansions will happen in coming quarters. In US the contracted customers didn't take up volume as per plan and there was some delay from new customer as well. Expects the orders and delivery to pick up from Sep 17 onwards and from Q3 onwards new customer will come, which will help revenue and EBIT margin of America business.
Traction of revenue from American market was already visible from July 17 onwards. Management expects revenues and margins to improve going forward.
In India, the GST was mixed bag. Oral care customers more are aligned while Beauty and cosmetic is mixed bag with some customers have aligned and some are yet to align to new GST system. Pharma which started to suffer from May 17 onwards is not yet ready and how long they will take is anybody's guess. Management expects Sep 17 quarter to be better than June 17 quarter, but normalcy to return only post Sep 17 in Indian operations. GST has higher impact on Pharma business than on beauty and cosmetics. However, expects post Sep 17, significant benefits of GST to start reflecting in the performance.
EAP geography did better in oral and non oral segment. The Non oral care market grew by around 20% in constant currency. Improved efficiency helped overall profitability. In Chinese oral care market, the company catered to more local Chinese customers than MNCs.
Capex for Q1 FY 18 was Rs 13 crore.
Average interest cost stood at 6.2% for June 17 quarter.
Overall, management expects around 12-13% top-line and 18% bottom-line growth in constant currency for FY18.
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