Hindalco Industries Q2 PAT up threefold

14 November 2016

Aditi Divekar
Business Standard

Hindalco Industries reported a net profit of Rs 440 crore in the September quarter, more than three times jump from the corresponding period last year even as revenues remained flat mainly because of fall in company's total expenses. Net sales of the Aditya Birla Group company stood flat at Rs 9,562 crore in the period under review as impact of higher aluminium revenues was largely negated by a sharp decline in copper realisation.

Year-on-year, aluminium revenues were higher by almost 10% (excluding Utkal and y-o-y and if we include Utkal it is 9%) on the back of strong volume growth, however, a 9% drop in copper revenues negated this increase, said the company in its release. The copper revenues declined due to fall in copper London Metal Exchange prices, along with lower premium and lower co-product prices (sulphuric acid and Di-ammonium phosphate), it said.

Lower expenses in the September quarter helped Hindalco churn better operating profits which more than doubled to Rs 805 crore in the period under review as against Rs 316 crore in the same period last year.

"The Company delivered robust operational performance in challenging macroeconomic conditions. Its operational performance was also supported by benign energy prices and some recovery in the aluminium prices," Hindalco said.

An exceptional income of Rs 85 crore also helped the aluminium producer improve its bottomline as Hindalco Industries part realised in cash its entire holding in its subsidiary Aditya Birla Minerals, Australia. According to Bloomberg estimates, Hindalco Industries was expected to earn a topline of Rs 8,026 crore and a bottomline was seen as a loss of Rs 96.46 crore.

The divestment of Aditya Birla Minerals Ltd (ABML), Australia was completed during the quarter. The transaction yielded a gain of Rs 145 crore and is included in exceptional items. The total cash consideration from this deal was Rs 367 crore, informed the company.

Regarding coal security, Hindalco said it secured a good portion of its coal requirement so far in the recent coal linkage auctions, at a reasonable premium to government notified price. This, along with the existing linkage for Renusagar power plant and captive coal mines will provide adequate coal security.

Going ahead, the macroeconomic headwinds still persist and the uncertain global macro factors pose several challenges, said the company. The price recovery is vulnerable to imminent Chinese capacity additions and smelter restarts, it said. The high level of imports continue to impact domestic sales volumes and Hindalco remains focused on operational excellence, higher value addition, customer centricity and cash conservation to tide over these issues.