Sparks fly as a worker supervises the flow of hot liquid metal as it flows from a furnace at a metallurgical plant in Norilsk, Russia (Photographer: Andrey Rudakov/Bloomberg)

Birla’s Hindalco Profit Jumps Aided by Copper Volumes, Novelis

(Bloomberg) -- Hindalco Industries Ltd. posted a 47 percent increase in quarterly profit driven by higher copper sales and lower finance expenses, helping offset an increase in input costs.

  • Net income, including that of its Utkal Alumina unit, rose to 7.13 billion rupees ($101 million) in the three months through December from 4.84 billion rupees a year earlier, billionaire Kumar Mangalam Birla’s Mumbai-based company said Tuesday. Sales rose 8.1 percent to nearly 12 billion rupees.

Key Insights

  • Hindalco’s U.S. unit Novelis Inc. reported a 6 percent increase in adjusted earnings before interest, taxes, depreciation and amortization in the third-quarter on higher shipments, better product portfolio mix and favorable metal costs. Novelis contributed more than 60 percent to consolidated revenue in the last financial year.
  • Value-added copper production climbed 59 percent from a year earlier as capacity expansion gathered pace and comprised nearly three-fifths of the company’s product sales.
  • Increased access to coal mines in India may ease cost pressures and power and fuel costs will be keenly watched.
  • Growing imports of aluminum and copper into India continue to impact domestic market, Hindalco said in the statement, flagging additional risks from weak global demand led by China and the impact of Brexit.

Market Reaction

  • Hindalco shares fell 0.7 percent in Mumbai at 2:50 p.m. local time and are down about 12 percent this year.
  • Analysts have 27 buy recommendations on the company and 3 sells, according to data compiled by Bloomberg.

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  • Standalone profit dropped 34 percent on year to 2.47 billion rupees
  • Utkal Alumina’s capacity expansion of 500,000 tons is expected to be operational by the year ending March 2021.
  • Novelis’s $175 million expansion in Brazil is expected to be commissioned in 2021-22 and the Aleris acquisition is estimated to close in second quarter of the next fiscal year.
  • Link to company’s earnings presentation

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