Vedanta H1 net plunges 46%; recovery in sight

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Mumbai: Vedanta Resources Plc on Thursday announced that the company’s net profit for the half year ended September dipped 46.2% due to weak metal prices. It reported a net profit of $188.2 million against $350 million in the corresponding period last year. The company’s revenues during the period stood at $2,978.6 million, down 25%, as compared to $3,973.2 million in the first half of FY09. It, however, anticipates recovery in metal prices in the next few months on the back of demand generated by economic and industrial growth in India.

Vedanta chairman Anil Agarwal said in a statement, “Our financial results in the first half demonstrate the resilience of our business in very challenging market conditions. Our low cost, diversified operations generated solid returns and cash flows in a period of lower commodity prices.”

Vedanta’s operating profit for the six months ended dipped 51.7% to $490.2 million. Its net debt at end of September was $969 million, with the group cash position, including liquid investments, at $6.0 billion. Vedanta has raised $3.35 billion during the 2010 financial year so far by issuing equity and convertible bonds to support its growth initiatives.

Share buybacks and purchases have increased the company’s holdings in some of its major subsidiaries during the period. With a total investment of $219.5 million, Vedanta’s holding in both Sterlite and Sesa Goa increased to 57%.

Vedanta had last month announced its Q2 production figures, with growth in iron ore production by 27% at 3.3 million tonnes and aluminum production by 13% at 120,000 metric tonnes. The company’s refined zinc production rose 15.6% to 1,41,000 tonnes due to improved smelter performance during the quarter ended September, while saleable iron ore output gained 27%. “The second quarter production broadly met our expectations. Our zinc, copper and aluminum operations in India operated at their rated capacity, while our iron ore business performed well considering the seasonal monsoons,” Vedanta had said in a statement.