The Hindu Business Line : Hindalco Q1 net profit unchanged at Rs 602.9 cr

Score card
Net sales at Rs 4,678 crore, grew by 9 per cent.
Other income amounted to Rs 124.6 crore.
Total expenditure grew over by over 13 per cent.
EBITDA was lower at Rs 1,009 crore.

Our Bureau

Mumbai, July 31 Hindalco reported a net profit of Rs 602.9 crore for the first quarter of the current fiscal, almost unchanged from the same year ago quarter when net profit had been Rs 601.5 crore.

The profit growth was flat because of the combined effect of a fall in alumina realisations, the impact of customs duty cut on imports and the sharp appreciation of the rupee against the US dollar, said a statement from the company.

Net sales, at Rs 4,678 crore, grew by nine per cent, from Rs 4,274 crore a year ago. Other income amounted to Rs 124.6 crore (Rs 77.6 crore). Total expenditure grew over by over 13 per cent, to Rs 3,794 crore (Rs 3,340 crore).

EBITDA was lower at Rs 1,009 crore against Rs 1,011 crore a year earlier.

Output high

Although aluminium production was the highest ever in any quarter and sales volumes rose 7.6 per cent, with the benefit of higher London Metal Exchange prices, the segment’s profit before interest and tax was lower by 10 per cent, at Rs 642 crore (Rs 712 crore) because of the rupee appreciation, said the company.

The copper business reported both higher sales and realisations and higher operational efficiencies. This was dented to some extent by the strong rupee; even so, the profit before interest and tax from this business increased to Rs 112.3 crore from Rs 97.8 crore. During the first half of 2007, TcRc declined by almost 15 per cent. The concentrate would continue to be short supply up to 2009; this may affect the TcRc, adversely, in the spot market and is likely to bring the copper business under strain in the coming quarters, said the company.

Over short term, alumina prices will face downward pressure due to explosive growth in Chinese alumina production, it said: “However, it is expected that alumina prices will not come down too sharply from the present levels, as a fall in alumina prices may make high cost refineries in China and other places non viable.”

In India, the Government’s focus on infrastructure, as well as growing importance of India as a global manufacturing hub for automobiles will propel aluminium growth in the country where the expected consumption growth is in the range of 8-9 per cent in FY08

For the company, higher volumes from brownfield expansions and the continued focus on maximizing free cash flow will be the major driver for the growth of the company in coming quarters, it said.

On Tuesday, Hindalco shares declined by 2.38 per cent on BSE to close at Rs 170.1.

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