Augmenting Major Expenditure Dents Into Mcleod Russel Q4 Profits

Mcleod Russel, the world's largest tea producer, has come out with poor set of numbers for the fourth quarter and year ended on 31 March, 2014. The company's topline witnessed decrease of 4% on yearly basis to Rs 321 crore during Q4FY14 against Rs 335 crore in Q4FY13. However, the company recorded loss at operating EBITDA level that stood at Rs 162 crore in Q4FY14 against loss of Rs 110 crore in same period of last fiscal year, on account of increase in major expenditure of the company.
 
During the said quarter, the company recorded sharp increase in its expenditure. Change in inventories and stock in trade of the company came up to 85% of total operating revenue in Q4FY14 against 72% in same period of last fiscal year. Further employee cost went up to 37% of total operating revenue as against 33% in Q4FY13. If we look at total operating expenses to total revenue ratio it came at 1.52x during Q4FY14 where it was 1.35x in same period of last quarter.
 
Bottomline of the company recorded net loss of Rs 192 crore in Q4FY14 against net loss of Rs 147 crore in same period of last fiscal year. The net loss of the company further increased during the quarter mainly due to increase in finance cost that went up by 43% to Rs 14.3 crore in Q4FY14 against Rs 10 crore in same period of last fiscal year.
 
Coming to yearly performance of the company for FY'14, Mcleod Russel financial performance during the said period was not up to the mark. Topline of the company recorded a decent growth of 7.2% to Rs 1788 crore in FY'14 against Rs 1668 crore in FY'14. However, EBITDA of the company fell by 7.5% to Rs 352 crore in the said period against Rs 381 crore in FY'13. Moreover, net profit of the company went down by 6% to Rs 257 crore in FY'14 against Rs 274 crore in last fiscal year.
 
The company has recommended dividend of Rs 7 per share (140%) on equity shares of Rs 5 each for the financial year ended March 31, 2014. At CMP of Rs 283.6 per share, the company is trading at 12.3x of its trailing 12-months earning.