Billionaire Birla’s Aluminum Giant Posts Sharp Fall in Profit

(Bloomberg) -- India’s Hindalco Industries Ltd. posted a 33% decline in quarterly profit as a slide in metal prices and weak demand squeezed margins.

• Group net income fell to 9.74 billion rupees ($136 million) during the three months ended September from 14.5 billion rupees a year earlier, the aluminum and copper producer run by billionaire Kumar Mangalam Birla said Monday. Sales fell 8.7% from a year earlier to 296.6 billion rupees.

Key Insights

• Prices of aluminum and copper have slid this quarter and, coupled with slower growth in consumption in India, have weighed on earnings.
  • Domestic aluminum demand declined 6% from a year earlier to 967,000 tons, while copper consumption has started showing signs of moderation since September after a 10% increase during the quarter due to comparison with a low base, the company said.
• Hindalco flagged risks from weakening global demand led by China, an escalation in the trade war between the U.S. and the Asian country, rising imports of aluminum and copper in India and the impact of Brexit
• Hindalco’s U.S. unit Novelis Inc. last week reported a 6% increase in net income to $123 million. Investors are watching for progress on the acquisition of U.S.-based Aleris Corp. by Novelis after it received conditional approval from the European Union for the deal. The company expects to close the transaction by Jan. 21, 2020.

Market Reaction

• Shares declined 1.8% in Mumbai to 200.15 rupees. The stock has slipped more than 10% this year.
• Analysts have 22 buy recommendations on the company, 2 holds and 1 sell, according to data compiled by Bloomberg.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Alpana Sarma, Unni Krishnan

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