Tata Tea Q1 Results - 2007

Tata Tea Ltd announced its results for quarter ended June,2007 this afternoon. The stand alone Tata Tea results reported Income from Operations of Rs 290 crores, an improvement of approx 14% over the previous year driven by strong brand volume sales of 18%.

Operating profits at Rs 54.58 crores have improved by 13%. The quarterly results show 17th consecutive quarter of quarter on quarter growth in operating profits mainly driven by branded tea sales. Interest on borrowings on a bridge loan taken to finance the acquisition of Energy Brands Inc. amounting to Rs 10.89 crores has impacted profitability. It is however expected that these loans will be repaid by the middle of the current year. Exceptional income during the quarter represents profit on sale of estate land/assets of Rs 3.04 crores net of amortization on Employee Separation Scheme of Rs 2.20 crores. Whilst the Profit before Tax of Rs 58.38 crores was higher by 2% over the previous year, the profit after tax at Rs 43 crores declined from previous years figure of Rs 44.56 crores. It was explained that the same was due to a higher effective tax rate due to plantation exit.

The Company's Consolidated world wide Income from Operations for the quarter was Rs 1018.84 crores, an improvement by 28% over the preceding year's turnover driven by higher branded tea sales coupled with the inclusion of income pertaining to the acquisition of Eight O Clock Coffee. The profit before tax from operations at Rs 111.83 crores declined marginally from Rs 113.86 crores in the previous year, the Group Consolidated Profit after Tax at Rs 45.68 crores was lower than the previous years figure of Rs 80.07 crores mainly due to higher advertising and promotional expenditure and the impact of interest on acquisitions at Rs 65.61 crores.

Under Indian GAAP, The Tetley Group's (the Company's 77.78% UK subsidiary) turnover for the quarter at Rs 526.28 crores was 6% higher than the corresponding figure of the previous year. The Profit before Tax prior to interest on acquisitions was Rs 32.52 crores compared to Rs 56.18 crores in the previous year. Higher advertising and promotional expenditure and interest on acquisitions have impacted the bottom line for the current quarter. Whilst most world wide markets displayed growth and stronger market shares, the new acquisitions catering to the specialty tea segment showed promising growth.

The company announced that the sale of its share in Energy Brands Inc.,USA to Coca Cola Company for an amount of $ 1 billion is likely to yield a profit of approximately $415 million.