Hindalco net up 15% on bullish metals

CORPORATE SCORECARD

Hindalco Industries, the Aditya Birla group flagship company, announced 15 per cent increase in quarterly net profit on higher metal prices on the London Metal Exchange (LME) and better realisation from the value-added products. The aluminium and copper major recorded the best-ever performance on annualised basis.

Hindalco's net profit in the quarter ended March 31, 2007, perked up to Rs 721.3 crore compared with Rs 626.3 crore in the same quarter last year.

The company reported 30 per cent increase in net sales to Rs 4,748.9 crore from Rs 3,657.4 crore, while other income shot up by 66 per cent to Rs 123.3 crore from Rs 74.3 crore. EBIDTA increased by 17 per cent to Rs 1,173.2 crore from Rs 1,004.1 crore and earnings per share (EPS) jumped by 13 per cent to Rs 7.2 from Rs 6.4.

Riding on strong LME prices, Hindalco Industries outperformed for the whole year of 2006-07 with 55 per cent increase in net profit at Rs 2,564.3 crore in comparison with Rs 1,655.5 crore in 2005-06. Similarly, turnover jumped by 61 per cent to Rs 18,313 crore from Rs 11,396.5 crore and other income by 52 per cent to Rs 370.1 crore from Rs 243.9 crore. EPS on annualised basis jumped by 52 per cent to Rs 25.5 from Rs 16.8 a share.

The company paid an interim dividend of 170 per cent for the FY07.

Terming the result as impressive, D Bhattacharya, MD, Hindalco Industries, said, "Higher capacity utilisation up to 106 per cent, increased realisation from value-added products and strengthening operational efficiencies resulted in both revenues and profits surpassing their respective previous levels." At the same time, factors such as rupee appreciation, import duty cut and duty differential, which have changed dramatically over the years make significant impact on the dollar-dominated business, he added. Import duty on aluminium has been brought down to 5.7 per cent now from 35 per cent in 2001, while duty differential has also come down to 3.1 per cent from 32 per cent.

Revenue from aluminium business stretched by 21.5 per cent to Rs 7,344.4 crore from Rs 6,042.3 crore during the year despite strong inflationary pressures. Profit before interest and tax rose 37.6 per cent to Rs 2,929.2 crore from Rs 2,128.1 crore. Meanwhile, copper business revenue doubled to Rs 10,977.6 crore from Rs 5,354.2 crore and profit before interest and tax surged to Rs 517.1 crore from Rs 19.3 crore.

Hindalco Industries aims to feed up to 40 per cent of its raw copper concentrate requirement from its captive mines from 25 per cent at present and therefore the company is scouting for acquiring copper mines in the copper-rich regions such as Chile, South America, Peru and Ecuador.

"Wherever we get economical and copper concentrate rich mines, we would acquire them," Bhattacharya said.

Talking about Alcan's stake in Utkal Alumina, Bhattacharya said, "We are currently evaluating the option. If we find the option economical and strategic, we would buy it," he added, without setting any timeframe.

Focusing on VAP, the company experienced the highest-ever growth in aluminium turnover of 59 per cent to the tune of Rs 6,380 crore in 2007 from Rs 4,955 crore in 2006. The VAP realisation for alumina was $481 a tonne as compared with $347 a tonne for standard variety.

"We are vying for quality game rather than volume game," said Bhattacharya.