HINDALCO INDUSTRIES LIMITED
Q1 FY 2011 RESULTS
HINDALCO’S
PRESS RELEASE - EXCERPTS
Financial Highlights
(In Rs. crore)
Q/E 30-Jun-10 : Q/E 30 –Jun- 09
Net sales & Optg revenue : 5,178 3,897
Other income 69 75
Profit before tax 673 600
Net profit 534 481
Basic EPS* 2.79 2.83
*EPS is lower on account of higher equity capital at Rs. 191.37 crore post QIP vs. Rs. 170.05 crore in Q1FY09.
Net sales at Rs.5,178 crore in Q1FY11 were up 33% over Q1FY10, driven by higher volumes, better product/geographic mix and improved realisation. Additionally its low cost advantage, arising from integration and captive coal for own power generation for the Hirakud smelter, cushioned the adverse impact of spiralling cost escalations of crude and crude derivatives as well as purchased coal for Renukoot and plummeting Copper TcRc. The company also benefitted from higher Aluminium LME and better by-product realisation in its Copper Business.
Other income and interest/ financing charges were constrained by lower returns on investment and lower average interest rate respectively.
Profit before tax is higher by 12% at Rs. 673 crore vis-à-vis Rs.600 crore in Q1FY10. Net profit is at Rs. 534 crore as against Rs. 481 crore in Q1FY10.
Business Segment Results
Of the total revenues of Rs.5,178 crore, Aluminium Business contributed Rs.1,867 crore with an EBIT of Rs.552 crore. Aluminium sales were higher on the back of higher volume, better mix, along with better LME compared to Q1FY10. These benefits were eroded partly by the appreciating Rupee and higher energy cost. The increase of 32% in revenue translated into an EBIT gain of 21% at Rs. 552 crore in Q1FY11 from Rs. 455 crore in Q1FY10.
In the Copper Business, revenues were higher at Rs.3,314 crore up by 34% from Rs.2,479 crore in Q1FY10, mainly on account of higher copper LME. However, the Copper Business being a custom smelting operation, with offset hedging program, was not significantly impacted by the gain or loss on changes in LME. Lower TcRc, higher energy cost and appreciating Rupee dented the margins, despite better efficiencies and improved mix. The Copper Business performance is to be seen in the light of planned shutdown of a Smelter for 24 days in April’10. The results of Copper Business, adjusted for this shutdown, are superior compared to Q1FY10.
Hirakud Outage: Operations of Aluminium Smelter at Hirakud have been affected in July, 2010 due to heavy rains and continuous bad weather including lightning. In line with the action plan, currently under implementation, electrolytic cells taken out of circuit will be restarted in a phased manner. This exercise is expected to be completed by end August, 2010. As a consequence of this unforeseen outage, Hirakud Aluminium production is expected to be lower by around 20,000 MT for the current fiscal. Efforts are being made to contain the impact of the loss by appropriate management action to optimize profitability across all other business segments of the Company. The Company has a comprehensive mega insurance policy which covers property damage and business interruptions.
Strategic Initiatives
Utkal Alumina International Limited [UAIL]: UAIL, which is a 100% subsidiary of Hindalco, is setting up a 1.5 mtpa alumina refinery in Rayagada district of Orissa. The project will feed the alumina requirements of the Mahan and the Aditya smelters presently under construction.
Hindalco has successfully achieved the financial closure of UAIL with the signing of a common loan agreement of Rs.4,906 crore on July 28, 2010. This constitutes the entire debt requirement of the project. The equity requirement for this project has already been tied up.
This project is expandable to 3 mtpa at relatively lower incremental capital cost.
This is a significant milestone in Hindalco's strategy to grow its alumina capacity and play the entire value chain in Aluminium.
Operational review
Aluminium
Total Alumina and Metal production is up by 9% and 3% respectively. Wire Rod production also rose up by 6% in Q1FY11. Downstream production grew by 4 % and 9% each in the case of Flat Rolled Products and Extrusions respectively, compared to Q1FY10.
Copper
Quarterly cathode production has been lower due to the planned smelter shutdown. The value added CCR production is up 38% on the back of increased capacity.
Brownfield Expansion Projects
Hirakud Smelter Expansion: The smelter expansion from 155 KTPA to 161 KTPA is scheduled for completion by Q2FY11. Smelter expansion from 161 to 213 KTPA along with 100 MW power plant expansions will be completed in Q4FY12. Further to the above, the smelting capacity at Hirakud is intended to be expanded from the proposed 213 KTPA to 360 KTPA with a corresponding increase in back-up captive power from the proposed 467.5 MW to 967.5 MW.
Hirakud Flat Rolled Products Project: This project is underway for the transfer of all key equipment from Novelis Plant at Rogerstone, UK to Hirakud. This will enable us to produce can-body stock for local and export markets. The project is slated for completion in Q2 FY12.
Belgaum Special Alumina Project: The special alumina production from Belgaum is proposed to be ramped up to 316 KTPA from 138 KTPA. To reduce the cost of production substantially, a proposal for an 18 MW co-gen power plant and a railway siding facility are also being evaluated.
Greenfield Projects
Utkal Alumina Project (UAIL): The construction of 1.5 Mio tpa alumina refinery along with a 90 MW captive co-gen plant is in full swing. The output from UAIL would be sufficient to feed alumina to the Mahan and the Aditya smelters. Around 82% of the project cost has already been committed. The production of alumina is expected to start around Q2 FY12.
Mahan Aluminium Project: A 359 KTPA, Aluminium Smelter capacity along with a 900 MW captive power plant is coming up in Bargwan, Madhya Pradesh. Around 82 per cent of the total project cost has been committed. The first metal from the Smelter is expected by Q2 FY 12.
Aditya Aluminium Project: A 359 KTPA, Aluminium Smelter along with a 900 MW captive power plant is coming up in Orissa. Around 59% of the total project cost for Smelter and Power Plant has been committed. The first metal from the smelter is expected by Q3 FY12
Aditya Refinery Project: A 1.5 Mio TPA Alumina Refinery along with a 90 MW Co-gen plant is coming up in Orissa. This is a replica of the Utkal Alumina refinery. The refinery would be mechanically complete by Q1 FY14.
Jharkhand Aluminium Project: A 359 KTPA, Aluminium smelter along with a 900 MW captive power plant is coming up in Sonahatu, Jharkhand. This is replica of the Aditya / Mahan smelter. The land acquisition process has already started. Activities for getting environmental clearance have started and presentation made to the MOEF expert committee. The Tubed coal mine has been allotted jointly with Tata Power. The first metal from the Smelter is expected by Q1 FY14.
Industry outlook
Aluminium
Global aluminium demand in Q1FY11 reflected good growth of 24% over Q1 FY10. A strong growth in Asia has been propelled by Chinese growth, and was partly supported by a “low-base” effect. The key drivers of growth in North America and Europe were the Auto and Building sectors. Japan, too, had good growth in flat rolled products, extrusions and castings. Pick-up in consumption led to a slight drop of 0.17 mt in LME stocks reaching 4.42 mt at the end of June. A strong demand enabled LME to reach USD 2,400/ t levels in April but due to European fears, the quarter ended at USD 1,900 levels. Going forward, LME is likely to be supported by the cost pressures, especially in China, although further gains would be contingent upon improvement in risk appetite in financial markets.
Indian industry had a nominal growth of 8% on y-o-y basis. Major growth areas were the electrical sector and castings for the Auto Industry. The global demand is expected to continue to be good in Q2, though the base-effect will start to get diluted.
Copper
Global copper consumption continued to improve in the last quarter. The world refined copper market balance was in a small deficit in the first four months of 2010 after recording large surpluses in the previous two years. Exchange stocks at end-June 2010 were at 646,000 tonne recording a drop of 107,000 tonne over the quarter. Despite this, copper prices at the LME exhibited weakness on account of increased risk aversion. World copper consumption is likely to continue to grow in the coming quarters on improving demand from emerging countries. The outlook for refined copper consumption in India remains robust, given the continued growth momentum in the economy. Strong concentrates demand from China and stagnant World mine production continued to keep concentrates market in deficit which led to spot TcRcs (Treatment and Refining Charges) decline to low single-digit during the current quarter. TcRcs under mid-year negotiations for current year dropped by about 20% over the previous year. There are no signs of any significant improvement in the concentrates market scenario in immediate future.
Company outlook
Aggressive and innovative approaches for low cost brownfield expansions, sweating of existing assets, continuous cost reduction and optimising working capital continue to yield results despite inflationary conditions. The outlook for coming quarters would be impacted by a subdued financial market sentiment, uncertain commodity and financial markets and lower production at Hirakud. The company is determined to tide over these negatives because of its strong fundamentals and committed resources. The progress in the Greenfield projects and their activity levels is expected to further accelerate during the year.
=END OF EXCERPTS OF PRESS RELEASE=
NON CONSOLIDATED FIGURES
COMPARISON
The FIGURES FOR q1 fy2011 are compared below, with the previous quarter Q4 FY2010 (at dif%1), the corresponding quarter Q1 FY2010 (at dif%2)and proportionately (Q1 FY11 x 4) with the FY2010 figures (at dif%3). The consolidated figures for FY2010 are also furnished in last column since, Hindalco’s consolidated figures are very high compared to its stand alone figures.
As can be seen from the percentage figures, the Q1 FY 2011 is an improvement over the corresponding quarter of Q1 FY2010 significantly.
Net sales has improved by 32.9%.
Profit from operation has improved by 12% - due to higher total expenditure which has increased by 36.5%.
Net profit has increased by 11.2%.
Basic EPS at Rs.2.79 is down slightly from Rs.2.83 in the corresponding qtr.
However, over all, Hindalco has performed very well – as stated in its Press release. It can be seen that it has huge expansion programs on the anvil and can be expected to expand production and profits with each commissioning.
RESULTS IN FIGURES :
Jun-10 | dif%1 | dif%2 | dif%3 | |||
Net Sales | 514551 | -4 | 32.9 | 1940802 | 6 | 6056255 |
Other OptgIncome | 3274 | -28.7 | 14.5 | 12826 | 2.1 | 15956 |
SIT&WIP | 19420 | -18.4 | -161.2 | -75525 | -202.9 | -170119 |
Raw Materials | 333802 | -7.7 | 3 | 1516368 | -11.9 | 4144552 |
Traded Goods | 9898 | 164867 | 918.3 | 7199 | 450 | 7380 |
Employees Cost | 22786 | 2.4 | 10.1 | 87775 | 3.8 | 506501 |
Depreciation | 16909 | 0.4 | 2.3 | 66721 | 1.4 | 278360 |
Other Expen | 48673 | -1.1 | 27555 | 122819 | 58.5 | 609318 |
Total Expenditure | 451488 | -4.7 | 36.5 | 1725357 | 4.7 | 5375992 |
Profit -Operations | 66337 | -0.5 | 12 | 228271 | 16.2 | 696219 |
Other Income | 6892 | -11.3 | -8.5 | 25985 | 6.1 | 32271 |
P B I&EI | 73229 | -1.7 | 9.7 | 254256 | 15.2 | 728490 |
Interest | 5933 | -15.9 | -13 | 27800 | -14.6 | 110414 |
P A I B B WI | 67296 | -0.2 | 12.2 | 226456 | 18.9 | 618076 |
P B T | 67296 | -0.2 | 12.2 | 226456 | 18.9 | 618076 |
Tax expense | 13856 | 1263.8 | 16.4 | 34893 | 58.8 | 182891 |
P A T | 53440 | -19.5 | 11.2 | 191563 | 11.6 | 435185 |
Net Profit | 53440 | -19.5 | 11.2 | 191563 | 11.6 | 392547 |
Dividend% | - | 135 | - | |||
Face Value | 1 | 0 | 0 | 1 | 1 | |
Paid Up Equity | 19137 | 0 | 12.5 | 19137 | 19137 | |
Reserves | - | - | 2134620 | |||
Basic EPS | 2.79 | -19.6 | -1.4 | 10.82 | 3.1 | 21.58 |
Public holding% | 59.46 | 0.3 | 59.29 |
ANNOUNCEMENTS
TO THE EXCHANGE
03-08-2010 Hindalco Industries Limited has informed the Exchange regarding the standalone Results for the quarter ended on 30-JUN-2010 as follows: Net Sales of Rs. 517825 lacs for quarter ending on 30-JUN-2010 against Rs. 387090 lacs for the quarter ending on 30-JUN-2009. Net Profit / (Loss) of Rs. 53440 lacs for the quarter ending on 30-JUN-2010 against Rs. 48056 lacs for the quarter ending on 30-JUN-2009. -
03-08-2010 Hindalco Industries Limited has informed the Exchange vide its letter dated August 03, 2010 regarding "Utkal Alumina International Limited financing".
20-07-2010 Hindalco Industries Limited has informed the Exchange vide its letter dated July 20, 2010 that heavy rains and continuous bad weather including lightning have affected the operations of the Hirakud Aluminium Smelter of the Company.
04-06-2010 Hindalco Industries Limited has informed the Exchange that the Annual General Meeting of the Shareholders of the Company will be held on September 3, 2010. Further the Register of Members and Share Transfer Books of the Equity Shares of the Company will remain closed from August 26, 2010 to September 3, 2010 (both days inclusive) for the purpose of payment of Equity Dividend. -
04-06-2010 Hindalco Industries Limited has informed the Exchange regarding the consolidated Results for the year ended on 31-MAR-2010 as follows: Net Sales of Rs. 6056255 lacs for year ending on 31-MAR-2010 against Rs. 6541461 lacs for the year ending on 31-MAR-2009. Net Profit / (Loss) of Rs. 392547 lacs for the year ending on 31-MAR-2010 against Rs. 48531 lacs for the year ending on 31-MAR-2009. -
04-06-2010 Hindalco Industries Limited has informed the Exchange regarding the standalone Results for the year ended on 31-MAR-2010 as follows: Net Sales of Rs. 1940802 lacs for year ending on 31-MAR-2010 against Rs. 1805297 lacs for the year ending on 31-MAR-2009. Net Profit / (Loss) of Rs. 191563 lacs for the year ending on 31-MAR-2010 against Rs. 223027 lacs for the year ending on 31-MAR-2009.
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