Hindalco Industries reported a consolidated net loss of Rs 709 crore for the quarter ended June 30 — its highest quarterly loss — due to certain exceptional items undertaken during the period. It was also its first loss in 18 quarters.
The company had reported a standalone net loss of Rs 32.75 crore in the quarter ended December 2015. According to Bloomberg consensus estimates, the company was expected to report a loss of Rs 305.53 crore during the quarter. Hindalco had reported a consolidated net profit of Rs 1,063 crore in the corresponding quarter last year.
The loss was due to a net loss of Rs 140 crore from discontinued operations of Duffel and Lewisport plants, Rs 683 crore of tax effected special items in Novelis and Rs 25 crore of ex-gratia paid to employees in India for their contribution during Covid-19. Without these items, the company would have reported a net profit of Rs 139 crore, it said in a statement.
The revenue from operations declined 15.64% year-on-year to Rs 25,283 crore due to lower India aluminium prices and lower volumes and realisations, both of copper and byproducts.
The company’s Ebitda (earnings before interest, tax, depreciation and amortisation) fell by a sharp 37.41% y-o-y to Rs 2,359 crore with aluminium Ebitda remaining flat, while the copper Ebitda declined a steep 88% during the quarter impacted by Covid-19-related shutdowns in Dahej in April and large parts of May. Consequently, operating margins came in at 9.3%, registering a fall of 330 basis points on a y-o-y basis.
The company’s US arm, Novelis’ financial results were impacted by the Covid-19 pandemic. However, the beverage can market showed resilience and the monthly automotive demand is picking up. Novelis recorded a quarterly adjusted Ebitda of $253 million in Q1FY21 versus $372 million, and an adjusted Ebitda per tonne of $327 versus $448/tonne in the year-ago quarter. This was impacted by lower shipments and unfavourable product mix, but partially offset by good cost control and Ebitda contribution from the acquired Aleris business.
The company maintained its India aluminium Ebitda at Rs 856 crore in Q1FY21, which remained flat compared with corresponding quarter last year with costs reigned in. With smelter utilisation at 90% in Q1FY21, Indian aluminium business achieved aluminium metal production of 291 Kt against 326 Kt. Aluminium metal sales were at 303 Kt in Q1FY21, down 5% y-o-y, due to the impact of the subdued domestic market, which was offset by higher exports.
However, the copper business came under pressure with the disruptions caused by Covid-19. Copper cathode production in Q1FY21 was impacted, leading to lower production at 41 Kt, down 46%. Total copper metal sales were lower by 29%, at 58 Kt, and copper value added product (CC Rods) sales were down 51% at 31Kt, impacted by lower domestic demand. However, cathode exports in Q1FY21 were higher at 25Kt. Copper Ebitda declined nearly 88% in Q1FY21 to Rs 37 crore compared to Rs 307 crore in the corresponding quarter last year.
Commenting on the outlook, Hindalco Industries MD Satish Pai said, “We are seeing Indian and international demand start to come back. All our plants are operational and customers are starting to pick up now. Also, various government initiatives put in place are a positive. The second quarter will be strong for us and so will be Q3 and Q4.”
The capital expenditure plan for Hindalco India is Rs 1,500 crore for the current financial year, while that of Novelis has been scaled down to $450 million from $500 million guided earlier. The consolidated net debt to Ebitda ratio was 3.83x on June 30 versus 2.61x on March 31, 2020.