December quarter profit shrinks to R40 crore as metal prices decline sharply in the global market
Hindalco Industries on Tuesday reported 88.7% decline in its net profit from a year ago in December quarter to Rs 40 crore, due to lower sales and realisation as metal prices declined sharply in the global market. The company’s profits were above expectations as Bloomberg estimates had predicted a loss of Rs 174 crore in the quarter.
Net sales of the Aditya Birla Group firm fell 5.3% from a year ago to Rs 8,021 crore, due to sharp decline in aluminium and copper realisations.
According to Bloomberg consensus the company was expected to report loss of Rs 174 crore on sales of Rs 8,337 crore.
Operating results of the company was severely impacted by the sharp drop in London Metal Exchange prices and regional aluminium premium. As a result combined decline in realisations on year-on-year basis was over $700 per tonne of Aluminium.
Depreciation and finance cost were higher given the progressive capitalisation of Greenfield projects. These charges were higher by Rs 227 crore compared to Rs 663 crore a year ago. As a result profit before tax for the quarter stood at Rs 31 crore, while net profit for the quarter ending was Rs 40 crore.
However, strong operating performance on the back of ramp up of smelters, partly aided by softer input prices helped in partially mitigating the realisation pressures, the company said in a statement.
Strong increase in aluminium volumes and thrust on value addition has partially offset the impact of severe fall in realisation in the quarter.
Total expenditure of the company declined 1.3% from a year ago to Rs 7786.65 crore.
In the quarter the copper business continued to drive profits of the company however it was marginally lower than the previous. Earnings from copper was Rs 384 crore in the third quarter tad below Rs 396 crore a year ago.
The copper segment continued a steady performance with cathode production at 94kt. Copper continued to deliver a steady performance even as Copper revenues fell sharply due to 27% fall in Copper LM, the company said.
Fertilizer production of the company increased 9% from a year ago to 89 KT. Aluminium earnings in the quarter was however down by 79% from a year ago to Rs 80.87 crore. Aluminum production in the quarter was up 35% from a year ago to 296 kt.
The company’s two new smelters Mahan and Aditya are operational and are running at full capacity.
The company said in line with its long-term strategy with regard to its coal mix, the first of the four coal blocks won in the auction – Gare Palma IV/4 has started producing coal towards the quarter.