Q2 Results: Hindalco’s Profit Growth Slumps For Third Straight Quarter

Hindalco Industries Ltd.’s quarterly profit fell in-line with analysts’ expectations from a decline in spot metal prices and lower sales volume due to prolonged rains.

Net profit fell 74 percent year-on-year in the quarter ended September to Rs 78 crore, the Aditya Birla group company said in an exchange filing. Analyst estimates compiled by Bloomberg had pegged profit at Rs 97.01 crore. Hindalco’s profit dropped on a year-on-year basis for the third consecutive quarter.

• Standalone revenue fell 8.1 percent to Rs 9,965 crore.
• Operating profit fell 27.4 percent to Rs 792 crore.
• Operating margin contracted to 7.9 percent from 10.1 percent.

Hindalco’s earnings, even when including its subsidiary Utkal Alumina International, remained under pressure. The combined profit was 77 percent lower than last year at Rs 167 crore. Operating profit was 35 percent lower at Rs 1,251 crore. Operating margin saw a 530-basis-point contraction to 12.5 percent.

Aluminium prices during the quarter have fallen by around 14 percent over last year. Besides, the domestic market for aluminum, too, remained flat, the company said in its investor presentation. While the domestic copper market grew due to a favourable base effect, realisations remained lower from the impact of heavy rains.

The results comes after the firm received conditional approval last month from European Union for its $2.6-billion proposed acquisition of aluminium parts maker Aleris Corp. Hindalco, in an interview to BloombergQuint earlier, had said it expects the Aleris acquisition to be completed by December against its earlier target of September.

Watch | Managing Director Satish Pai on Hindalco’s outlook

Highlights from the interview with Hindalco MD Pai:

• Expect higher operational performance for aluminium division in the second half of the financial year.
• Expect domestic demand for aluminium to also pick up in H2
• Expect volume pick up but lower realisation for copper division in H2
• Aleris acquisition will be completed by January 2020