AMTEK AUTO LIMITED 
By For Immediate Release August 11th, 2011
Amtek Auto Limited
Unaudited Standalone and Consolidated
Fourth Quarter and Full Year Results for FY2011 Consolidated Performance FY2011 vs. FY2010 Net Sales increased by 29% EBITDA increased by 36% NEW DELHI, India, August 11th, 2011 – Amtek Auto Limited (referred to as “Amtek Auto” or the “Company”, NSE: AMTEKAUTO, BSE: 520077), one of the largest integrated component manufacturers in India with a strong global presence, announced its Unaudited Standalone and Consolidated Fourth Quarter and Full Year Results for FY2011, in accordance with Indian GAAP. Commenting on the results and performance, Mr. Arvind Dham, Chairman of Amtek Auto said: “Amtek Auto delivered strong results over the last year and expects to continue consolidating its position as one of the foremost Indian component manufacturers. We are particularly pleased with this performance in the context of increased global economic uncertainty over the past few months, which led to moderating growth in the fourth quarter across all major global auto markets. We remain confident of achieving our strategic objectives in the coming year.” Commenting on the results and performance, Mr. John Flintham, Chief Executive Officer of Amtek Auto said: “Through our relentless focus on adding value to our clients, Amtek Auto delivered consistent top line performance throughout the year. We continue to enhance operational efficiencies whilst improving capacity utilizations, and maintained steady margins despite volatile end markets and input costs. We are also making steady progress in executing on our established growth plans. During the year, we entered into partnerships with leading global companies that will significantly enhance our product range in the Non-Auto segment.” Note: All financial figures in this release exclude Amtek India, for ease of comparison. However, the audited results of the Company will consolidate Amtek India for Q4 FY2011 as per statutory requirements. Starting from Q1 FY2012, earnings releases for Amtek Auto will consolidate Amtek India’s financials. Consolidated Financial Highlights1,2(Rs. Crore) | Q4 | y-o-y Growth (%) | Q3 | q-o-q Growth (%) | Full Year | y-o-y Growth (%) |
(Rs. Crore) | FY2011 FY2010 | y-o-y Growth (%) | FY2011 | q-o-q Growth (%) | FY2011 FY2010 | y-o-y Growth (%) |
Net Sales | 1,223.2 942.9 29.7% | 1,171.4 4.4% | 4,510.4 3,490.8 29.2% | |||
EBITDA1 | 245.6 202.3 21.4% | 248.9 (1.3)% | 964.4 707.6 36.3% | |||
EBITDA Margin (%) | 20.1% 21.5% | 21.2% | 21.4% 20.3% | |||
Net Profit | 144.3 79.9 80.6% | 111.0 30.0% | 466.1 281.9 65.4% | |||
One-Time Tax Adjustment2 | (62.0) - | - | (62.0) - | |||
Adj. Net Profit | 82.4 79.9 3.0% | 111.0 (25.8)% | 404.1 281.9 43.4% | |||
Adj. Net Profit Margin (%) | 6.4% 8.0% | 9.0% | 8.6% 7.6% | |||
Adjusted Basic EPS (Rs) | 3.00 3.50 (14.3)% | 4.49 (33.2)% | 15.10 15.15 (0.3)% |
1 EBITDA is earnings before interest, depreciation and taxes and excludes other income
2 Tax adjustment in Q4 FY2011 due to extraordinary charge of Rs. 186 Crore on account of premium paid on redemption of FCCBs
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Economic Environment
Indian Markets: Auto During Q4 FY2011, Auto sales volumes across all three core areas (passenger vehicles, commercial vehicles and 2/3 wheelers) in India demonstrated robust growth of 16.1% y-o-y. Although these growth levels are encouraging, the last quarter relative to Q3 FY2011 has underperformed. Higher fuel prices, inflationary pressures and a rising interest rate environment have impacted overall demand in recent months.S al es Volumes Q4 FY2011 Q4 FY2010 Y-o-Y Change Q3 FY2011 Q-o-Q Change |
Passe nger Vehicl es 602,798 554,213 8.8% 715,356 (15.7%) Comme rci al Vehicl es 171,525 150,268 14.1% 202,498 (15.3%) 2/3 Whe el er 3,298,011 2,802,314 17.7% 3,241,966 1.7% |
Total 4,072,334 3,506,795 16.1% 4,159,820 (2.1%) |
Source: SIAM |
The longer term industry dynamics in India continue to build momentum with on-going investments by major OEMs. India is not only an attractive destination for OEMs as an end customer market but also an increasingly strategically important manufacturing base. For example, global majors Ford, GM and Renault-Nissan have all recently announced that they will set up their manufacturing facilities in India. The total investment by these three OEMs is expected to be approximately $2.6 billion for a total capacity of 1.1 million units. Cumulative announced investments in the Indian Auto sector by global OEMs reached $30 billion during 2010-113. These manufacturing facilities will be used to service both the domestic and export markets.
This strategic OEM focus on India will create new opportunities for auto component companies like Amtek Auto, which have the technology and capacity required to service the OEMs’ needs to the highest quality standards. Furthermore, many of these companies will also be able to selectively capitalize on a consolidating industry where scale and operational efficiencies are critical. Indian Markets: Non–Auto Non-Auto markets such as tractors, off-highway, construction equipment and railway components provide continuing growth opportunities for Amtek Auto to leverage its core skill sets. Tractor sales volumes in FY2011 increased 24% compared to the prior year. Growth in this segment is being driven by a number of factors including increasing rural disposable incomes and continued government focus on agriculture development. International Markets: Auto Total sales of passenger and commercial vehicles in Europe declined marginally during the quarter on a y-o-y and sequential quarter basis. Individual European countries continued to be subject to varying end market dynamics. During the quarter, Auto sales volumes in Germany showed strong performance and increased by 7.6% and 16.0% on a y-o-y basis in the passenger and commercial vehicles segments, respectively. Passenger car sales volumes in UK however declined by (5.2%) y-o-y while commercial vehicle sales increased by 17.0% y-o-y. Passenger car sales volumes in the UK also varied across manufacturers e.g. Q4 FY2011 sales volumes for Tata JLR increased by 8.6% y-o-y.3 IBEF, July 2011
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In the US, the heavy and medium truck sector experienced significant production growth of 85.7% y- o-y and 25.6% q-o-q. In the car and light truck sector, production grew moderately by 2.7% y-o-y but declined by (6.0%) q-o-q.
Operational Highlights FY2011 Financial Performance Consolidated Net Sales in FY2011 grew by 29.2% compared to the prior year, due to robust performance across Indian domestic, Overseas and Non-Auto businesses. The Indian domestic business grew 34.7% y-o-y, driven by strong volume growth. Net Sales in the Overseas business was relatively stable and grew 5.8% y-o-y. The Non-Auto segment experienced good growth, with increased contribution from this segment compared to the prior year. Net Sales growth during the year significantly outperformed overall industry growth in both Indian and European markets. FY2011 consolidated EBITDA increased by 36.3% and EBITDA margins increased by 111 bps compared to FY2010. This growth was primarily due to higher sales volumes, improved operational efficiencies and enhanced capacity utilizations across all product lines, in the Indian and Overseas manufacturing units. FY2011 consolidated Adjusted Net Profit increased by 43.4% and Adjusted Net Profit margins increased by 96 bps compared to the prior year. The increase in Net Profit was due to higher EBITDA, offset to some extent by higher interest expense. Interest expense increased from Rs. 189 Crore in FY2010 to Rs. 258 Crore in FY2011, due to a higher interest rate environment and working capital requirements. Overseas Auto Segment Despite a challenging economic environment in Europe during the past year, FY2011 Net Sales in the European businesses was encouraging, increasing by 5.8% y-o-y. This growth significantly outperformed the overall market, driven by strong year on year growth in the UK. Net Sales in the UK benefited from organic growth with key existing clients. All of the Overseas business units have benefited from improved operating efficiencies, full benefits of the consolidation action taken previously and also increasing capacity utilizations. Non-Auto Segment The Non-Auto segment continues to perform well and exceeded expectations. Contribution by this segment increased from approximately 18% in FY2010 to 22% in FY2011. This growth was primarily driven by strong performance in the tractors, construction and railway components segments. Growth in tractors and construction equipment was driven both by new business and organic growth with existing clients. As part of the ongoing strategic development, Amtek Auto will continue to develop its order book in other Non-Auto businesses. Amtek Auto is also pleased to report that all of the joint ventures including American Railcar Industries, (North American manufacturer of hopper and tank railcars), Autech (a South Korean manufacturer of specialized vehicles) and Aizen (a Japanese manufacturer of specialized machines) are progressing as per agreed schedules and are expected to start contributing significantly to the Non-Auto segment in coming months.3
Q4 FY2011 Financial Performance
Q4 FY2011 consolidated Net Sales grew by 29.7% compared to the prior year. This was driven by strong volume growth in the Indian and Overseas markets. Net Sales in India, during the quarter, grew by 31.6% y-o-y, significantly outperforming the overall industry. On a sequential quarter basis, there has been a moderation in growth to 6.3%. Net Sales in the Overseas segment during the quarter grew 32.9% y-o-y, although growth on a sequential quarter basis declined to 4.7%. Consolidated EBITDA in Q4 FY2011 increased by 21.4% and EBITDA margins declined (138 bps) compared to the prior year. EBITDA growth benefited from higher sales volumes while margins were impacted by inflationary pressures. Q4 FY2011 consolidated Adjusted Net Profit increased by 3.0% and Adjusted Net Profit margins declined by (159 bps) compared to the prior year. The increase in Adjusted Net Profits was due to higher EBITDA offset to some extent by higher interest expenses. Interest expenses grew from Rs. 54 Crore in Q4 FY2010 to Rs. 72 Crore in Q4 FY2011, primarily due to a higher interest rate environment and increased working capital requirements. FCCB Redemption Key Financial Events During the quarter, Amtek Auto redeemed all of its remaining $250 million Zero Coupon Foreign Currency Convertible Bonds (the “FCCBs”) that were issued in June 2006. The last and final cash payment for this FCCB of $145.9 million (inclusive of premium) was made in accordance with the terms and conditions of the issue at maturity. The Company was therefore not required to allot any equity shares arising out of a potential conversion of these remaining FCCBs. Warrant Conversion During the quarter, the promoters of Amtek Auto converted all outstanding warrants, as a result of which, their shareholding in the Company increased as of June 30, 2011 Amtek India’s Tender Offer As previously reported, Amtek Auto successfully completed its tender offer for Amtek India, which is now a subsidiary of the Company. During this quarter, Amtek Auto further increased its stake in Amtek India by 5%, to 61.64%. Performance Outlook for Amtek Auto India has been acknowledged by many global OEMs as one of the most strategically important emerging auto markets in the world. Indian auto component manufacturers have been able to successfully support global OEMs in their international expansion strategies, as they seek to penetrate Indian and other Asian markets. Their technological and manufacturing base also enables Indian auto component firms to supply global customers by cost effectively exporting key products to Europe and the US. Ongoing sovereign debt issues in Europe, slower than expected growth in the US and sustained inflationary pressures in Indian and other Asian markets, have resulted in greater economic uncertainty over the past few months. As we look forward we expect continued volatility in the4
global economic environment.
As a result, market expectations for growth in the Indian automotive industry have been scaled down to approximately 10 - 12%. In the coming year, Amtek Auto is confident of achieving an overall higher growth than the industry norm through its focus on new product introductions, addition of significant new contracts during the past year and continued consolidation in the component industry. In addition, the Company will continue to grow its Non-Auto business in different markets including railways, tractors, aerospace, off-highway and the construction industry. The Company expects this segment to grow in line with its strategic plan for the coming year. Analyst / Investor / Media Enquiries John Flintham, Amtek Group +91 (0) 11 4234 4444 Amman Kumar, Amtek Group +91 (0) 11 4234 4444 Deepak Balwani, Churchgate Partners +91 (0) 22 3953 7444 For further information on Amtek Auto visit www.amtek.comNotes:
1. Net Sales: Excludes Other Income
2. EBITDA: Earnings before interest, taxes and depreciation; Excluding Other Income
3. Net Profit: Profit after tax before minority interest; excludes extraordinary item
4. Net Worth: Share Capital and Reserves and Surplus
5. Basic Earnings per Share: Each share face value of Rs. 2.00; calculated on the basis of 23.32 Crore shares outstanding as of June 30th, 2011; excludes extraordinary item
Safe Harbour
This release contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Amtek Auto’s future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Amtek Auto undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances.
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Amtek Group Fact Sheet
1. Background
Amtek Group, comprised of Amtek Auto, Amtek India and Ahmednagar Forgings, is one of the largest integrated component manufacturers in India, with a strong global presence. It has 43 world class manufacturing facilities located in India (38), Europe (4) and North America (1). Amtek Group is well positioned in the Indian Auto and Non-Auto component markets and is the largest casting and machining, and the second largest forging company in India.
Amtek Group has significant expertise in the manufacturing of auto components with proven capabilities in forging, grey and ductile iron casting, gravity and high-pressure aluminium die casting and machining and sub-assembly. This has enabled the development of a highly engineered component product portfolio including the manufacturing of complex and safety components for engine, transmission, suspension and chassis for passenger cars, 2/3 wheelers, light and heavy commercial vehicles. Given its global manufacturing base and product range, Amtek Group is a preferred supplier to many global blue chip OEMs. None of the Group’s clients accounted for over 15% of revenues in FY2011.
In addition to the core automotive business, Amtek Group also manufactures products for Non-Auto markets such as railway wagons, locomotives components, specialty vehicles, aerospace, tractors, off-highway and construction equipment. The Group has successfully enhanced its Non-Auto capabilities through technical collaborations and joint ventures. The Non-Auto segment contributed
~22% of net sales in FY2011.
Amtek Auto has generated average EBITDA margins of 21% over the last 5 years. Amtek Auto currently has a conservative leverage profile, with significant financial flexibility available for organic or inorganic expansion. The Company also has a number of leading investors in its shareholder base.
Amtek Group’s Auto strategy is to continue to strengthen its presence in the automotive market by focusing on the Indian domestic market, increasing exports, leveraging its international manufacturing base and enhancing technology through Joint Ventures and technical collaborations. The Group is also focused on improving utilization across all its product lines.
2. Automobile Industry4
India's automobile industry, which accounts for 6% of GDP, is currently estimated to be $73 billion and is expected to grow to $145 billion by 2016. The longer term dynamics in the Indian auto sector remain positive, which is evident from the significant investments being made by global OEMs. Cumulative investments by global OEMs in India reached $30 billion during 2010-11.
The Indian automobile industry has grown significantly over the last decade, with sales volumes more than tripling, from 4.7 million to 14.9 million units. The long-term potential for growth in the auto industry is favourable due to low vehicle penetration in the country. Total passenger car production in India is expected to increase to 9 million units by 20205. Although a significant portion of this growth will come from the fast growing domestic market, exports are expected to comprise 35% of the total market by 2020. The growth of the auto industry in 2011-12 is expected to be 10-12%.
The Indian auto component industry had an estimated size of $26 billion in 2010-11, up 18% from $22 billion in 2009-10. This sector is well positioned to cater to the global auto components outsourcing market and is poised to grow approximately 5x to $113 billion by 2020. The industry has been exporting around 13% of its output. In the year 2009-10, the industry exported goods worth $3.8 billion. Exports, which touched $5 billion in 2010-11, are expected to grow by 20-25% in 2011-12.
4 ibef.org & Analyst estimates
5 Automotive Component Manufacturers Association (ACMA)
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