Hindalco Q1 Results: First Loss In 18 Quarters, Shares End Higher
Hindalco Industries Ltd. has reported its first loss in 18 quarters as volumes fell after the coronavirus lockdown disrupted economic activities.
Net loss of the billionaire Kumar Managalam Birla's company stood at Rs 40 crore in the quarter ended June compared with a Rs 23-crore profit a year ago, according to an exchange filing on Friday. That's the first loss since the third quarter of 2015-16. Analysts estimates compiled by Bloomberg had pegged the loss at Rs 31.5 crore.
The loss comes even as most of the aluminum maker’s smelters and major refineries remained operational during the April-June period.
Aluminium metal sales fell 5% year-on-year to 303 kilotonnes during the quarter on account of a subdued domestic market. But that was partly offset by higher exports. An enhanced thrust on fixed cost reduction, better operational efficiencies and lower input costs led to a decline in cost of production of aluminium, the company said in a statement. Copper cathode production was impacted by disruptions in operations due to the pandemic, leading to lower production at 41 kilotonnes, down 46%, it said.
Revenue of the aluminium maker fell 26.2% year-on-year to Rs 7,420 crore during the reported quarter, against the Rs 7,787.9-crore forecast.
Hindalco's earnings before interest, tax, depreciation and amortisation declined 20.2% to Rs 573 crore, lower the estimated Rs 712 crore. That was led by a sharp decline in operating profit of its copper division, which slumped 87% year-on-year to Rs 37 crore.
The decline in operating profit of the copper division was led by lower volumes and by-product realisations. The aluminium division's Ebitda remained flat at Rs 856 crore compared with Rs 853 crore a year ago. Hindalco's Ebitda margin, however, expanded to 7.72% from 7.14% a year ago, still lower than the 9.2% estimate.
The company's U.S. subsidiary Novelis Inc., too, reported a loss in the quarter ended June, driven by higher finance costs and depreciation burden.
The parent, however, remained upbeat on the consolidated business going forward.
“All our aluminium India smelters operated at more than 90% capacity during the lockdown. We maintained our sales volumes, with exports accounting for nearly 80% of sales,” Managing Director Satish Pai said in the statement. “This performance led to our Indian aluminium business recording an industry-high Ebitda margin.”
On Friday, Hindalco's share price rose 0.19% to Rs 183.85 apiece on the BSE while the benchmark Sensex fell 1.13% to end the day at 37,877.34 points. The quarterly results were declared during market hours.