Smithkline Beecham Consumer Healthcare Limited (SBCH) has posted a 7% decline in 3QFY02 net profit to Rs 283 m. If we exclude the extraordinary expense burden from last year's numbers then the profit has fallen by 13%. The decline in profits was primarily as a result of expenditure increasing at a faster clip than sales as well as increased taxation provisioning on account of deffered taxes. The tax burden went up by 64% YoY during the quarter. The company's sales (including excise) went up by over 9%.
Operating Profit (EBDIT)
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No. of Shares (eoy) (m)
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The performance shows signs of a slowdown hitting SBCH too. One must remember that in the first half of FY02 the company had notched up an impressive 21% growth in turnover. However, the performance is not strictly comparable as in the first half of the previous year sales were deflated due to subdued trading.
The operating margins have declined by 90 basis points in the third quarter reflecting the difficult scenario the company must be facing. Its staff costs increased by 31% YoY during the quarter. However, the company's sterling first half performance has saved SBCH's nine month consolidated numbers. On a YoY basis, the nine month sales have improved by an encouraging 16%. The bottomline is up by 17%.
Raw and packaging material consumption
Deffered revenue expenditure
However, as we had warned earlier too, the deffered tax burden as well as the slowdown has affected SBCH's growth momentum. The company is likely to match our turnover projections for FY02 (Rs 8.6 bn), however, the bottomline projections are likely to fall short due to the deffered tax burden. We would have to adjust the taxation numbers in our projections.
At the current market price of Rs 409 the stock trades at a P/E of 14x annualised nine month FY02 earnings. In the short term the stock may feel the pressure on valuations because of its performance going forward. However, SBCH in the long term looks attractive even at these valuations.
GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.
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