Hindalco Q4 net dips 9.6% on low aluminium price

Hindalco Industries, the Aditya Birla Group flagship company, on Tuesday reported a 9.6 per cent drop in fourth-quarter net profit, compared to a year ago, due to low aluminium price on the London Metal Exchange and a steep escalation in the cost of production.

Stand-alone net profit for the three months to March fell to Rs 640 crore, from Rs 708 crore a year earlier. Net sales rose to Rs 7,563.3 crore, from Rs 6,760.7 crore.

Debu Bhattacharya, managing director of Hindalco, said, “The pressure on the LME will continue and margins will remain under pressure.” He said coal costs were moving only in upward direction, adding to the cost pressure.

Revenue from the aluminium business stood at Rs 2,499 crore, compared to Rs 2,211 crore in the corresponding period last year. Profit before interest and tax (PBIT) from the segment fell to Rs 484 crore, from Rs 562 crore. “The results would have been better, but for increased input costs and lower realisation on the back of lower aluminium LME,” the company said in a statement.

Revenue from the copper business grew to Rs 5,154 crore, against Rs 4,637 crore. PBIT advanced to Rs 293 crore, from 206 crore. The company said, “Revenues are higher consequent to better mix and by-products sales. PBIT is up by 43 per cent due to higher production, improved efficiencies, higher treatment and refining charges and by-product credit, offset to some extent by higher energy costs.”

Hindalco allotted 150 million warrants on a preferential basis to the promoters on March 22.

They can apply for and obtain allotment of one equity share of Re 1 each at a price of Rs 144.35 per share against each such warrant at any time on or before the expiry of 18 months from the date of allotment in one or more tranches.

The promoters have paid 25 per cent of the price of the warrants. This means that in 18 months, the promoters will pump Rs 2,165.25 crore into the company. They have already paid Rs 541.31 crore.

The company also raised Rs 3,000 crore by issuing 10-year 9.55 per cent secured redeemable non-convertible debentures on April 25.

Hindalco said, “The volatile commodity price and spiralling energy costs put significant challenge for the company. The company is confident to mitigate the cost pressure to a large extent on the strengths of integration in operation and operational efficiencies.”

Bhattacharya said, “The near-term outlook is cautious. Our conversion of Ebitda (earnings before interest, taxes, depreciation, and amortization) to bottom-line will be impacted in 2012-13, as depreciation for new capacities will kick in and interest costs will go up.”

Hindalco shares on Tuesday closed 1.16 per cent higher at Rs 117.40 on the Bombay Stock Exchange.