Hindalco Q1 PAT at Rs 4.13 bn, up 30% YoY on better operational performance

Hindalco Industries, the country's largest aluminium producer, reported a net profit of Rs 4.13 billion for June quarter on Friday, up 30 per cent from corresponding period last year as revenues increased and expenses slipped marginally improving operating profits.

The company's top line stood at Rs 105.93 billion in the period under review, up 1.73 per cent from same period last year on the back of better realisations and stable plant operations. Copper revenues on the other hand were impacted in the quarter gone by due to lower volumes on account of a planned maintenance shutdown in Q1FY19, at one of the smelters. 

As per Bloomberg estimates, Hindalco's bottomline was seen at Rs 4.40 billion, while top line was expected to be at Rs 110.12 billion.

Aluminium Value Added Products (VAP, including Wire Rod) production was at 113,000 tonnes versus 116,000 tonnes in Q1 FY18. This level was sustained, despite challenges thrown by an increasing flow of imports, said Hindalco. 

The revenue from copper segment was at Rs 50.06 billion in June quarter as against Rs 54.03 billion in the same period last year.  The realizations in the by-products, such as Di-ammonium phosphate (DAP) and sulphuric acid were higher, leading a higher EBITDA of Rs 3.35 billion in Q1 FY19 versus Rs 3.22 billion in Q1 FY18. The Tc/Rc was marginally lower in Q1 FY19 vs the corresponding period of the earlier year, said the company. 

Including earnings from Utkal Alumina refinery, the Aditya Birla Group company's bottomline stood at Rs 7.34 billion, up 102 per cent as against Rs 3.64 billion in Q1FY18, as higher EBITDA and lower finance costs lent firm support. In the period under review, the company reported highest ever quarterly EBITDA of Rs 19.51 billion (Utkal Alumina included), up 17 per cent on year-on-year basis on the back of supporting macros, operating excellence and higher by-products realisation in the copper business. 

This was despite increase in the input costs, mainly of coal and furnace oil. The interest expense was lower by 23 per cent at Rs 4.64 billion, mainly on account of re-pricing of long term project loans and loan repayments made during last year. 

“Going ahead, coal and furnace oil costs continue to remain a concern as the former usually faces rake availability issues during monsoons and price of furnace oil is dependent on global oil prices,” managing director Satish Pai told Business Standard.

As on June 30, 2018, Hindalco's standalone net debt stands at Rs 172.97 billion. The company has seen net debt to EBITDA  at end June, 2018 improve to 2.57x from 2.67x at end March, 2018. “As we generate cash from operations, we will use it for planned capex and whatever is surplus will be used for prepayment of debt. That is plan on debt reduction,” said Pai.

While Utkal Alumina has contributed substantially in Hindalco's June quarter earnings, the company's near-term plans are to sell the alumina produced by Utkal to a third party. For this, Hindalco is carrying out brownfield capacity expansion of 500,000 tonnes at Utkal Alumina. The expanision is on schedule and is expected to be completed by FY21, said Hindalco in its release.

“The third party market for alumina is attractive and currently we are not selling to the third party at all. Whatever is produced by Utkal is for captive consumption. The expansion will help us diversify the revenue stream a bit,” informed Pai.

Among its other projects, Hindalco's New Copper Continuous Cast Rod Plant (CCR-3) ramp up is on schedule. 
“In coming quarters, we expect copper operations to perform better than the June quarter as it would be running full-fledged,” informed Pai.