Hindalco Industries on Friday reported a 28% drop in its consolidated net profit for the quarter-ended June at Rs 1,063 crore, impacted by global downturn and lower commodity prices. Revenue for the quarter declined 3.6% to Rs 29,972 crore.
Earnings before interest, tax, depreciation and amortisation (Ebitda) was down 13% to Rs 3,769 crore for the quarter compared to the same period last fiscal. Hindalco said long-term loans remained unchanged from end-FY19, with consolidated net debt to Ebitda at 2.69x as on June 30, 2019. On a standalone basis, Hindalco including Utkal Alumina reported a 77% drop in its net profit at Rs 167 crore. Alumina (including Utkal) and Aluminium metal production stood at 686 Kt and 326 Kt, respectively, in Q1FY20.
Revenue from copper business was at Rs 4,593 crore in Q1FY20 vs Rs 5,012 crore a year ago. Ebitda was lower at Rs 267 crore in Q1FY20 compared to Rs 347 crore in the same period last year, due to lower by-product volumes and realisations. Hindalco’s subsidiary Novelis reported revenues at $2.9 billion in Q1FY20, down 6% y-o-y. The decline was mainly due to a fall in average base aluminium price, partially offset by higher total shipments and a favourable product price and mix. Adjusted Ebitda grew 11% to touch a record high of $372 million in Q1FY20, the company said in a statement.
The company also said that Novelis achieved its best-ever adjusted Ebitda per tonne of $448 in Q1FY20, up 7% y-o-y. The company recorded a net income, excluding tax-effected special items, of $145 million in Q1FY20, up 26% y-o-y. Tax-effected special items include restructuring & impairment, metal price lag, gain/loss on assets held for sale, loss on extinguishment of debt, loss/gain on sale of business. Total shipments of flat rolled products (FRP) in Q1FY20 grew 4% to 830 Kt. Satish Pai, managing director, Hindalco, said Q2FY20 will be better than the first quarter.
“Copper will also get better once the shutdown is finished. The LME is dependent on global macro economy like whether the US-China trade war gets sorted out or not. The downturn in commodity sector started in December of last year. If you look at any metal cycles, the downturn doesn’t normally last for more than a year,” he said.
Hindalco indicated that all regulatory approvals for the Aleris acquisition continue to progress and are expected to close in Q3FY20. It indicated that all organic expansion projects for Novelis in US, China and Brazil are progressing on time and on budget. Utkal Alumina’s brownfield capacity expansion of 500 Kt is on track and is expected to be operational by mid-FY21. Shares of Hindalco closed Friday’s session down 2.73% at Rs 176.10 on the BSE.