Friday, January 30, 2009

BWI: Hindalco Industries Limited Q3 FY 2008-2009 Results

Press release from Business Wire India
Source: Hindalco Industries Limited
Friday, January 30, 2009 04:24 PM IST (10:54 AM GMT)
Editors: General: Consumer interest, Economy; Business: Accounting & management consultancy services, Banking & financial services, Commodities & materials, Financial Analyst, Heavy industries, Mining companies, Stock exchanges
Release no: 19101
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Hindalco Industries Limited Q3 FY 2008-2009 Results
Hindalco Posts Outstanding Results in a Turbulent Economic Environment.

Mumbai, Maharashtra, India, Friday, January 30, 2009 -- (Business Wire India) --

-- PBIT at Rs.768.6 crores - maintained.
-- Net Profit at Rs.544.8 crores - marginally higher.
-- Drastic drop in LME - Aluminium (25%) and Copper (46%).
-- Net Sales and Revenues at Rs.4,117 crores.

Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, today announced its unaudited financial results for the quarter ended 31, December 2008.

Net sales and revenues at Rs. 4117 crores in 3rd Quarter of FY 09 are lower as compared to Rs. 4,539 crores for the corresponding period in FY 08. The steep reduction in Aluminium and Copper LME led to fall in the overall sales revenue; this was mitigated by the rupee depreciation against the USD. Despite lower sales realizations and higher export sales due to lower domestic demand, the net profit at Rs. 545 crores is marginally higher than Rs. 543 crores in the corresponding year's comparable quarter. Higher metal production consequent to the Hirakud brownfield expansion, profit improvement measures and higher other Income have been the drivers.

The revenue in aluminium business rose by 14% to Rs. 1980 crores vis-à-vis Rs. 1,736 crores in the corresponding period in the previous year on the back of the highest ever metal volumes. However the unprecedented 25% fall in LME and spiraling input cost squeezed the margin, despite gains from weaker rupee. The shrinkage in domestic demand for downstream products resulted in an adverse product mix.

In the copper business, revenues stood at Rs.2139 crores lower by 24 % vis-à-vis Rs. 2806 crores in Q3FY08 as a result of the 46% lower LME. The profit before interest and tax rose by 23% to Rs. 116 crores from Rs. 94 crores in the corresponding quarter last year despite a 33% fall in TcRc, mainly due to better by-product realization, operational efficiencies and forex translation impact.

Startegic initiatives

A joint venture company viz. Hydromine Global Minerals GMBH Limited has been incorporated in British Virgin Island for the purpose of development and operation of one or more bauxite mines in the Minim Martap and Ngaoundal regions of the Adamaoua Province of the republic of Cameroon (Africa).Hindalco and Dubai Aluminium holds 45% equity each and the balance 10% is with by Hydomine USA.

Operational Review

Aluminium

With the expansion at Muri and Hirakud, Alumina production has risen by 48% at Muri and Metal production by 37% at Hirakud. Overall metal production was up by 11%. Demand shrinkage in domestic and global markets led to lower production of downstream products.

Copper

On the back of bi-annual shutdown in smelter-III, output declined. Copper cathodes production fell by 7%, while the CC rod production increased by 15.3% over the corresponding quarter in FY08.

The operations at copper smelter -II continue to be suspended.

Expansion projects

Muri

The expansion of the Muri alumina refinery from 110,000 tpa to 450,000 tpa is mechanically complete. Production is being ramped up in a phased manner. The entire steam and power requirement is being met by the new captive power plant. The production from the expanded facility is expected to reach its full capacity in second half of 2009.

Hirakud Phase II of the expansion of the smelting capacity from 100,000 tpa to 143,000 tpa was completed on time. Work on expansion to 155 ktpa is in progress and is expected to be completed by Aug- 09. The power generation capacity has been raised from 267.5 mw to 367.5 mw. All the units have been commissioned.

Belgaum The allotment of the lease for bauxite mines for expanding the alumina refinery capacity at Belgaum, Karnataka from 350 ktpa to 650 ktpa is still awaited.

Aditya Aluminium Project Aditya Aluminium, the integrated aluminium project, encompassing 1 to 1.5 million tpa alumina refinery, 260,000 to 359,000 tpa aluminium smelter and 750 to 900 mw captive power plant is progressing as planned. A major portion of the total land required for the project has been acquired. Environmental clearances have been obtained for the smelter, the captive power plant (CPP) and the alumina refinery. The water drawl agreement has also been executed. The construction power is already in place. The construction of transmission lines and upgradation of substations to draw power is in progress. The first metal from the smelter is proposed to be produced by October 2011. The refinery is proposed to be mechanically completed by January 2013. The technology contracts for the smelter and alumina have been executed with Aluminium Pechiney and Alcan respectively. Consultants have been appointed for detailed engineering for the smelter and CPP. Major proprietary equipments have been ordered for the smelter.

Mahan project The Mahan aluminium project with a smelter capacity of 359 ktpa and CPP of 900 mw is on track. The land acquisition for the project is underway. The company has been allotted a coal block in a JV with the Essar group for the coal requirement of the CPP. Preliminary environmental clearances have been obtained. The power connectivity for commencing construction has been approved. The water resource department has allocated the necessary water source. The production of coal is expected to start in 2010. The technology contract for the smelter has already been executed with Aluminium Pechiney. The first metal from the smelter is expected by July 2011. Basic engineering packages have been received on schedule. Detailed engineering activities for the smelter and CPP are in progress. Major proprietary equipments ordered for smelter.

Jharkhand project The proposed smelter capacity of the Jharkhand aluminium project is 359 ktpa and a CPP of 900 mw. The plant location has been shifted from Latehar to Sonahatu block which is 20 kilometers from Muri and 55 kilometers from Ranchi. Land has already been earmarked. Topographic and socioeconomic surveys are underway. The government of Jharkhand has given the water allocation clearance for 55 mcm of water from Subernrekha basin. Tubed coal mine has been allotted jointly with Tata Power. The technology contract for the smelter has already been executed with Aluminium Pechiney.CSR activities are being ramped up. The approximate date for the first metal from the smelter is expected by June 2012.

Utkal The construction of Utkal alumina refinery with a proposed capacity of 1.5 mtpa is currently underway. The company has acquired the land for the plant and other facilities. The basic engineering packages have already been received from Alcan (technology supplier). Major packages have been ordered & the balance is being ordered. The detailed engineering for the main plant area is nearing completion. The civil work for alumina refinery and captive power plant is in progress. Bauxite mining activities are expected to start by mid 2010. The mechanical completion of the plant is expected by January 2011 and the first alumina is expected to be produced around July 2011.

Hindalco Almex Aerospace Limited

This joint venture company for the manufacture of high-strength Aluminium alloys for applications in the aerospace, sporting goods and surface transport industries has been commissioned in Nov.-08 and production has started.

Industry outlook

Aluminium

China, USA and Europe led the global de-growth of 9%, in Q3FY09 as compared to Q3FY08, in Aluminium Consumption. The demand in these countries is expected to decline further in Q4FY09.
The Transport sector remained the largest consumer for Aluminium products in 2008. With the downturn expected in Transport, Building and Construction sectors , producers have announced production cutbacks upto 5.05 million tons per annum.

Despite announced cutbacks LME stocks continue to climb further impacting Aluminium prices, which is yet to spot the bottom.

Copper

Weak demand and increase in exchange stocks have pulled down copper prices. Mine production would be adversely affected due to the likely closure of a few high costs mines, delay in upcoming projects and slow down in investment in new mines.

Increased availability of copper concentrate due to lower capacity utilization at Smelters has led to a hike in benchmark TCRC for 2009 by 66% as compared to the previous year. Current spot market is above benchmark TCRC. However, disposal of Sulphuric Acid, a byproduct, remains a key concern for smelters.

Global refined copper consumption during 2008 grew by about 0.6%. The forecast is that the demand would either remain flat or decline during 2009 until the economic environment improves. Over all concentrate market is expected to be steady or slightly surplus during CY - 09.

Company outlook

The business continues to be impacted by the overall slow down in the global economy and the unprecedented fall in commodity prices. The short-term outlook seems negative. However the long term market fundamentals remain strong.
The company has been taking proactive measures in areas of input cost management, efficiencies and other possible areas to tide over and emerge stronger from the global crisis. The ramp up of brownfield expansions, enhanced asset productivity and containment of input cost along with effective working capital management to maximise free cash flow continues to be the major growth drivers.

Please click the links mentioned below to view the entire Press Release, Third Quarter Financial Results and Third Quarter Result Notes:


Press Release

Third Quarter Financial Results

Third Quarter Result Notes


For picture(s)/data to illustrate this release click below:

http://www.BusinessWireIndia.com/attachments/Third_ Quarter_Press_Release.doc
Third_ Quarter_Press_Release.doc
http://www.BusinessWireIndia.com/attachments/Third_ Quarter_Results_31.12.2008.xls
Third_ Quarter_Results_31.12.2008.xls
http://www.BusinessWireIndia.com/attachments/Third_ Quarter_Results_Notes.doc
Third_ Quarter_Results_Notes.doc


CONTACT DETAILS
Dr. (Mrs.) Pragnya Ram, Hindalco Industries Limited, +91 (022) 66525160/ +91 (022) 66525000, pragnya.ram@adityabirla.com

KEYWORDS
CONSUMER, ECONOMY, CONSULTANCY SERVICES, BANKING, COMMODITIES, Financial Analyst, HEAVY INDUSTRIES, MINING, STOCK EXCHANGES, 500440.BO, HALCq.L, HALC.F

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