Hindalco net soars 4-fold to Rs 294cr on low coal, oil prices

Despite a challenging macro-economic environment, Hindalco today reported over four-fold jump in standalone net profit at Rs 294 crore for the three months to June, mainly on account of strong operational performance as well as low prices of coal and oil.
"Operational performance (in aluminium segment) has been good, volumes have been high, input costs have been low, although the LME (London Metal Exchange) and realisation has been negative for this business," Hindalco Managing Director Satish Pai told reporters here.
"We were also significantly supported by low coal prices, low oil prices. So we had lower input costs that helped us," said the head of the Aditya Birla Group flagship.

The aluminium and copper producer's standalone income fell 11 per cent to Rs 7,716,53 crore in the first quarter ended June 30 from Rs 8,667 crore a year ago on account of drop in realisations. Similarly, total expenses dipped to Rs 6,703.82 crore from Rs 7,993.05 crore.
In spite of a fall in aluminium revenues, the year-on- year aluminium revenues were higher by 8 per cent on the back of a strong volume growth but a 28 per cent drop in copper revenues negated this increase.
The copper business, however, saw weak growth as it was impacted due to lower production on account of the scheduled annual maintenance shutdown.

"Our copper business after the annual maintenance shutdown has ramped up very smoothly. Copper segment was weaker in Q1 but is expected to see strong performance in coming quarters," Pai noted.

The company, which has acquired 4.5 million tonne of coal through government auction of coal linkages late last fiscal year, said the same has locked-in its coal needs for next five years.
"Going forward, the fact that we got 4.5 million tonne of coal linkage which will be delivered from October means that coal prices we have seen are probably going to be sustainable for the next five years going forward," Pai said.

He, however, said the macroeconomic headwinds still persist and the uncertain global macro factors pose several challenges. "We cannot control the macro environment. We cannot say what the LME is going to be but whats under our control, under our control is operating efficiency. We focusing on supply chain and logistics. I think this is place where we can improve our costs further," Pai said.
"We are going to gradually increase our value added products so some of our downstream projects are slowly coming up to capacity so as the value added percentage goes up I think this is going to contribute more to our earnings very strong," he added.