Kennametal is a leading manufacturer of hard metal, hard metal products and machine tools and caters to the needs of auto and auto related industries, light and general engineering industries etc., and seeks to provide a competitive edge to its customers through total manufacturing solutions.

Performance for the quarter ended December 08

The top line of the company has posted 18% fall to Rs 80.15 crore, mainly driven by the decline in its both- Net Machine Tools segment (NMT) by 8% and Net hard metal and hard metal products segment (NHM& MP) by 20% respectively. NHM & MP contributes 78% of the total revenues. OPM on the back of drop in revenues has contracted by 980 bps to 11% and pushed down profits at the operating level by 57% to Rs 8.78 crore.

The segment margins of NMT segment improved by 510 bps to 9.5% but for whooping fall in major NHM &MP segment by 1340 bps to 16.4%, Operating Profits were lower. All the Expenditure heads as % of sales has increased in the quarter ended December 08. Mainly, Other expenditure increased by 560 bps to 25.4% and employee cost increased by 430 bps to 22.3%.

Going forward, other income increased by 62% to Rs 2.72 crore. Interest cost was down by 29% to Rs 0.05 crore and depreciation went up by 11% to Rs 4.58 crore and restricted PBT down by 61% to Rs 6.87 crore. At PBIT level, NHM&MP segment de grew by 56% and contributed 86% of the total. With the dip in effective tax rate by 400 bps to 29.8%, Net Profit has reported a de growth of 59% to Rs 4.82 crore.

Performance for Half year ended December 08

For the Six months ended December08 period, Net sales have reported de growth of by 4% to Rs 179.46 crore, mainly due to de growth observed in its both segments. With dip in segmental margins of NHM&MP segment by 710 bps to 24.3%, OPM has contracted by 290 bps to 18.5%. Thus the operating profit was also down by 17% to Rs 33.24 crore.

The other income increased by 47% restricted PBIDT to report fall of 10% to Rs 40.67 crore. Further, zooming interest cost by 231% to Rs 0.53 crore and depreciation rose by 16% to Rs 9.06 crore, led PBT down by 16% to Rs 31.08 crore. With the dip in effective tax rate by 130 bps to 32.5%, Net Profit has reported a de growth of 15% to Rs 20.98 crore.

Other Information:

The scrip was hovering at Rs 141 as on 30 January 09

The Promoters share holding percentage was constant at 88.46% as on quarter ended December 08.