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31 October 2007
Hindalco
announces Q2 FY 2007- 2008 results
Click
here to view the results
- Revenues:
Rs. 4,960 crore
- EBIDTA:
Rs. 1,032 crore
- PAT:
643 crore
Financial
highlights
| (In
Rs. crore) |
Quarter
ended
30 Sep 2007
|
Quarter
ended
30 Sep 2006
|
Half
year
ended
30 Sep 2007
|
Half
year
ended
30 Sep 2006
|
| Net
sales and operating revenue |
4,959.7
|
4,634.2
|
9,637.6
|
8,907.9
|
| Other
income |
109.8
|
110.8
|
234.4
|
188.4
|
| EBITDA |
1,031.5
|
1,097.2
|
2,040.4
|
2,108.2
|
| Depreciation and
impairments |
144.6
|
208.0
|
287.4
|
342.1
|
| Interest
and finance charges |
63.2
|
51.5
|
119.4
|
114.9
|
| Profit before
tax (PBT) |
823.7
|
837.7
|
1,633.6
|
1,651.2
|
| Tax expenses |
180.9
|
240.1
|
387.9
|
452.1
|
| Net profit |
642.8
|
597.6
|
1,245.7
|
1,199.1
|
| EPS (basic and diluted) |
5.8
|
6.1
|
11.2
|
12.2
|
Hindalco
Industries Ltd., the flagship company of the Aditya Birla
Group, today announced its unaudited financial results for
the quarter ended 30 September 2007.
Net sales and operating revenues have grown by 7 per cent
to Rs. 4,959.7 crore as compared to Rs. 4,634.2 crore in the
corresponding period in FY07. Despite the strengthening of
the Rupee which resulted in the lowering of aluminium prices,
net profit for the quarter at Rs. 642.8 crore is up by 8 per
cent, vis-à-vis Rs. 597.6 crore in the corresponding
period of previous year.
Of the total revenue of Rs. 4,959.7 crore, aluminium business
contributed Rs. 1,785 crore on the back of production growth
of 8 per cent. Margins were maintained due to increased value-added
products, better sales mix and higher sales volume. The value-added
products in volume terms increased by 11 per cent and 15 per
cent in rolled products and extrusion products respectively.
The profit before interest and tax for aluminium business
was lower at Rs. 662 crore from Rs. 671 crore in the corresponding
quarter in the earlier year mainly on account of the sharp
appreciation of the Rupee against USD and the impact of custom
duty cut on imports. The rupee has appreciated 11 per cent
from Rs. 46.21 / USD in Q2 FY 07 to Rs. 41.15 / USD in the
current quarter. On the positive side, the aluminium business
benefited from higher LME prices, greater efficiencies, enhanced
volumes through better capacity utilisation and reduced input
costs due to better procurement management.
In the copper business, revenue stood at Rs. 3178.3 crore
from Rs. 2782.5 crore in Q2FY07 driven by higher sales volumes
and realisation resulting from an enriched product mix. The
profit before interest and tax grew marginally at Rs. 126.1
crore from Rs. 123.3 crore in the corresponding quarter last
year despite the fall in TcRc due to better by-product realisation
and improvement in operational efficiency.
The improvement in the market mix resulting from increased
duty paid sales was setoff by the reduction in the duty differential.
The grid power usage was lower on account of improved captive
power availability and a significant improvement in energy
consumption.
Strategic initiatives
The company has acquired the shareholding of Alcan Inc consisting
of 78,564,384 shares of Rs. 10 each in Utkal Alumina International
Ltd. (Utkal). Consequently, Utkal is now a wholly owned subsidiary
of the company.
Operational review
Aluminium
All the aluminium plants operated at consistently high capacity
utilisation. The full advantage of Phase I of Hirakud expansion
helped in increasing metal production by 8 per cent. The downstream
assets purchased in the last two years were fully utilised,
in addition to improved production from other plants. Production
of value-added products (VAP) grew by 7 per cent. Rolled products
and extrusions production extended by 18 per cent and 13 per
cent respectively. Alumina production is less than last year
primarily due to the hooking of existing alumina refinery
with expanded facility at Muri.
| Production |
Units
|
Q2
FY08
|
Q2
FY07
|
Change
(per cent)
|
H1
FY08
|
H1
FY07
|
Change
(per cent)
|
| Alumina |
MT |
282,292
|
290,462
|
-3
|
584,722
|
589,911
|
-1
|
| Primary metal |
MT |
118,257
|
109,324
|
8
|
234,426
|
216,480
|
8
|
| Wire
rods |
MT |
18,031
|
17,255
|
4
|
35,464
|
34,273
|
3
|
| Rolled products |
MT |
57,273
|
52,794
|
8
|
114,366
|
104,766
|
9
|
| Extruded
products |
MT |
11,107
|
9,848
|
13
|
21,293
|
18,393
|
16
|
| Foils |
MT |
6,618
|
6,715
|
-1
|
13,143
|
13,321
|
-1
|
| Wheels |
Nos. |
41,576
|
53,958
|
-23
|
86,152
|
100,064
|
-14
|
| Power |
MT |
2,102
|
2,095
|
0
|
4,266
|
4,153
|
3
|
Copper
In copper cathodes and CC rods production increased by 11 per
cent and 32 per cent respectively on YoY basis on the back of
the ramp up of the copper-III smelter and consistent production
from smelter-I. The operations at copper smelter -II continue
to remain suspended as cost of production is not economically
feasible.
| Production |
Units
|
Q2
FY08
|
Q2
FY07
|
Change
(per cent)
|
H1
FY08
|
H1
FY07
|
Change
(per cent)
|
| Copper
Cathodes |
MT |
79,181
|
71,391
|
11
|
158,415
|
136,061
|
16
|
| CC Rods |
MT |
35,335
|
26,711
|
32
|
69,430
|
54,016
|
29
|
Expansion projects
Muri
The expansion of the Muri Alumina refinery from 110,000 tpa
to 450,000 tpa is slated for commissioning in the third quarter
of the current fiscal.
Hirakud
Phase II of the expansion of the smelting capacity from 100,000
tpa to 143,000 tpa is well on track. The power generation capacity
from 267.5 mw to 367.5 mw will go on stream by December 2007.
Belgaum
The allotment of the lease for bauxite mines for expanding
the alumina refinery capacity at Belgaum, Karnataka from 350
ktpa to 650 ktpa is awaited.
Aditya
Aluminium
Aditya Aluminium, the integrated aluminium project, encompassing
1 to 1.5 million tpa alumina refinery, 260,000 to 325,000
tpa aluminium smelter and 750 mw captive power plant is progressing
as planned. The major portion of the total land required for
the project has been acquired. Environmental clearances have
been obtained for the smelter, the captive power plant (CPP)
and the refinery. Joint venture agreement with Mahanadi Coal
Limited and Neyveli Lignite Corporation Ltd. has been inked
for coal requirements. The water drawal agreement is also
finalised. The smelter is expected to be commissioned by March
2011 and the refinery by May 2011.
Mahan
The Mahan Aluminum project with a smelter capacity of 325
ktpa and a CPP of 750 mw is on schedule. The land acquisition
for the project is underway. The company has been allotted
a coal block in a JV with Essar Power for the coal requirement
of the CPP. Preliminary environmental clearances have been
obtained. The power connectivity for commencing construction
has been approved. The water resource department has provided
necessary facilities as well. Project is expected to roll
on by October 2011.
Latehar
For the Latehar project with a smelter capacity of 325 ktpa
and CPP of 750 mw, a tubed coal mine has been allocated jointly
with Tata Power. Preliminary environmental clearances have
been obtained. Land acquisition is in progress. The expected
date of commissioning is March 2012.
Utkal
Work on Utkal Alumna's 1.5 mtpa alumina refinery is underway.
The company has acquired the land for the plant and facilities.
The second phase of the rehabilitation and resettlement process
is in progress. Mining activities will start by March 2009.
The commissioning of the plant is expected by March 2010.
Hindalco
Almex Aerospace Limited
This project for manufacture of high strength aluminium alloys
for applications in the aerospace, sporting goods and surface
transport industries is on target. It is slated for commissioning
in fourth quarter in the current fiscal.
Industry outlook
Aluminium
Global primary aluminium consumption has witnessed a strong
demand growth of 8.8 per cent. US
production levels remained flat, the construction market continues
to disappoint and demand from the transportation markets remain
weak. The demand from Western Europe has been relatively stronger,
while that from Japan continued to be unexciting. China remains
the strongest driver of the demand as the metal grew at 34
per cent in this period, with transportation, construction
and foil sectors remaining firm on the back of strong industrial
activity.
Copper
The year-to-date has witnessed good demand for copper. The world
refined copper consumption growth is forecast at 4.3 per cent
for 2007, driven by China, the Gulf and Europe. The exchange
stock continues to remain below normal levels and a weak US
exchange rate will support current copper prices throughout
2007. The first half of 2008 may see an improvement in exchange
stocks and market moving towards a balance.
The tightness
in the concentrate market is the result of rapid expansion
in the smelting capacity — mostly in China and India.
Smelters have been buying on aggressive spot terms thereby
placing miners in an advantageous position in their negotiations
for fixing long-term benchmark TcRc for 2008 which is expected
to be lower than 2007. Smelters with large spot exposures
are not likely to meet their entire requirements and consequently
production cutbacks cannot be ruled out. Increasingly smelters
are scouting for participation in mine development to secure
long-term concentrate contracts. New major mining projects
under implementation are expected to come on-stream during
2010 to 2011. This would change the market balance.
Company
outlook
Higher volumes from asset sweating of existing plants and
from the brownfield expansion along with the continued focus
on maximising free cash flow will be the major driver for
the growth of the company in the coming quarters. A stronger
Rupee and soft alumina prices will put the profit margins
under pressure. However, with the benefits of brownfield expansions
and various cost optimisation initiatives in both aluminium
and copper businesses are expected to sustain satisfactory
performance, going forward.
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