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Hindalco Industries Ltd records a 10% drop in fourth-quarter net profit
Edited by : AL CIRCLE
2 min read
Hindalco Industries Ltd. (500440.BY) Tuesday posted a lower-than-expected 10% drop in fourth-quarter net profit, hurt by a higher tax payout and a fall in aluminum prices.
The aluminum and copper producer, part of India's diversified Aditya Birla group, said its unconsolidated net profit for the January-March period fell to INR6.40 billion from INR7.08 billion a year earlier. Profit topped the INR5.2 billion average of estimates in a Dow Jones Newswires poll of six analysts.
Unconsolidated sales rose 12% to INR75.63 billion from INR67.61 billion, as higher sales volume offset a decline in product prices.
Hindalco, like peer Sterlite Industries Ltd., had a tough fourth quarter as prices of base metals fell on the London Metals Exchange, while costs of fuel and raw materials remained high. The fall in profit at the metals companies comes after several quarters of earnings growth.
At a press conference, Managing Director Debu Bhattacharya said continued weakness in the LME prices is likely to keep pressuring Hindalco's profit margin.
He said that aluminum prices, which closed Tuesday 2,065/ton on the LME, could at best recover to $2,200/ton-$2,400/ton in the current financial year, but there's very little likelihood of their returning to the peak levels of $3,500/ton seen before the global economic crisis.
Hindalco said its tax payout was INR1.39 billion, up 77% from a year earlier when tax rates were lower and it had written back some payments.
The company said its aluminum output grew 4% to 144,000 metric tons in the fourth quarter, while production of copper cathodes rose 11% to 95,000 tons.
Operating profit at the company's aluminum business fell 14% to INR4.84 billion, hit by lower prices of the metal and higher input costs.
But, operating profit at the copper business surged 43% to INR2.93 billion, as miners paid higher treatment and refining charges for smelting bauxite ore into metal and as Hindalco produced more copper.
Hindalco said higher energy and commodity costs present a "significant challenge" for the company.
Bhattacharya added that the company's net profit in the current financial year may also be hit by higher interest costs and depreciation charges associated with its several brownfield and greenfield expansion projects.
The aluminum and copper producer, part of India's diversified Aditya Birla group, said its unconsolidated net profit for the January-March period fell to INR6.40 billion from INR7.08 billion a year earlier. Profit topped the INR5.2 billion average of estimates in a Dow Jones Newswires poll of six analysts.
Unconsolidated sales rose 12% to INR75.63 billion from INR67.61 billion, as higher sales volume offset a decline in product prices.
Hindalco, like peer Sterlite Industries Ltd., had a tough fourth quarter as prices of base metals fell on the London Metals Exchange, while costs of fuel and raw materials remained high. The fall in profit at the metals companies comes after several quarters of earnings growth.
At a press conference, Managing Director Debu Bhattacharya said continued weakness in the LME prices is likely to keep pressuring Hindalco's profit margin.
He said that aluminum prices, which closed Tuesday 2,065/ton on the LME, could at best recover to $2,200/ton-$2,400/ton in the current financial year, but there's very little likelihood of their returning to the peak levels of $3,500/ton seen before the global economic crisis.
Hindalco said its tax payout was INR1.39 billion, up 77% from a year earlier when tax rates were lower and it had written back some payments.
The company said its aluminum output grew 4% to 144,000 metric tons in the fourth quarter, while production of copper cathodes rose 11% to 95,000 tons.
Operating profit at the company's aluminum business fell 14% to INR4.84 billion, hit by lower prices of the metal and higher input costs.
But, operating profit at the copper business surged 43% to INR2.93 billion, as miners paid higher treatment and refining charges for smelting bauxite ore into metal and as Hindalco produced more copper.
Hindalco said higher energy and commodity costs present a "significant challenge" for the company.
Bhattacharya added that the company's net profit in the current financial year may also be hit by higher interest costs and depreciation charges associated with its several brownfield and greenfield expansion projects.
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