Hindalco Industries, the country's largest aluminum producer, today reported a flat net profit at Rs 602.9 crore in the first quarter compared with Rs 601.5 crore in the corresponding period a year ago. This performance can be attributed to lower prices which offset the gain from rise in metal output. | |
| The company, which bought Canada's Novelis in a $6 billion deal in April, registered a 9 per cent increase in net sales at Rs 4,677.9 crore in the June quarter compared with Rs 4,273.7 crore in the corresponding period a year earlier. Other income grew 61 per cent to Rs 124.6 crore (Rs 77.6 crore). |
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| Analysts said low realisation of alumina and frequent cuts in domestic aluminium prices hit Hindalco's profit. They said aluminium prices, stable in recent months while other metals on record highs, were expected to rise in coming quarters which would have a positive impact on Hindalco's profitability. |
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| Hindalco Chairman Kumar Mangalam Birla said at the company's annual general meeting today that Hindalco hoped to gain from rising aluminium demand, with domestic consumption likely to grow by 8-9 per cent in the year to March 2008. |
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| Hindalco's Chief Financial Officer S Talukdar said the integration of Novelis had begun but the full benefits of the acquisition would accrue only after 2010. |
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| Its share prices today fell 1.85 per cent to Rs 170.10 in a strong market. |
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| The company cut aluminium price by Rs 11,500 per tonne because of abundance of imports on low import duty and the rupee appreciation. In addition, customs duty was reduced to 5 per cent from 7.5 per cent earlier. |
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| Of its total revenues of Rs 4,678 crore, the aluminium business contributed Rs 1,753.7 crore after recording a 8.3 per cent growth in production at 1,16,169 tonnes (1,07,263 tonnes a year ago), the highest ever. |
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| On the positive side, the aluminium business benefited from higher LME prices, better operative efficiencies, enhanced volumes through better capacity utilisation and reduced input costs due to better procurement management as well as softening international prices. |
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| Revenues for the copper business stood at Rs 2,926.2 crore, driven by higher sales and improved realisation due to an enriched product mix. |
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| Profit before interest and tax increased to Rs 112.3 crore (Rs 97.8 crore). |
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| The copper business gained on account of operational efficiencies and higher treatment and refining charges (Tc/Rc), but was adversely impacted by the strengthening rupee. |
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| While terming the quarter as "business-unfriendly," Birla hinted that Tc/Rc was likely to come under pressure in coming quarters because of a global fall in this conversion rate. |
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| Hindalco estimated the stronger rupee and low Tc/Rc for copper concentrate to squeeze profit margins, which was likely to offset by higher volumes from the brownfield expansion and continued focus on value-added products. |
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