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Ingersoll Rand 1Q: Gas compressors selloff hits turnover - Views on News from Equitymaster
Ingersoll Rand 1Q: Gas compressors selloff hits turnover
On the face of it, Ingersoll Rand (India) Ltd. has declared dismal results in 1QFY2001. The company's turnover has declined by a significant 41% compared to the corresponding quarter in FY2000 (i.e. 1QFY00).
But this decline in turnover is not because it faced difficult market conditions. But the decline in turnover is because the company sold off its gas compressor business during this quarter. As a result, its turnover declined, but so did its expenditure (down by 35%). This however, adversely affected its operating margins.
(Rs m)
1QFY00
1QFY01
Change
Sales
1,145
679
-40.6%
Other Income
32
46
43.6%
Expenditure
932
603
-35.3%
Operating Profit (EBDIT)
213
76
-64.1%
Operating Profit Margin (%)
18.6%
11.2%
Interest
1
0
-85.7%
Depreciation
18
15
-13.6%
Profit before Tax
227
108
-52.5%
Other Adjustments
394
Tax
81
24
-70.5%
Profit after Tax/(Loss)
145
478
228.7%
Net profit margin (%)
12.7%
12.3%
No. of Shares (eoy) (m)
31.6
31.6
84.0
Earnings per share*
*(annualised)
-42.2%
The sale of its gas compressor business, resulted in an extraordinary profit of Rs 441 m. Ingersoll paid off Rs 47 m as VRS expenses to trim its workforce. All this resulted in a 229% surge in its bottomline to Rs 478 m. But in real terms (i.e. including only operational profits) its net profit actually declined by 42% to Rs 84 m. However, its actual net profit margin (excluding profit on sale of gas compressors) saw a marginal decline.
All in all, the company did not perform badly in terms of operations. But now, since Ingersoll's major restructuring is now over, all eyes will be on its 2nd quarter performance.
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