Hindalco Q1 profit falls 40% on lower revenue
2 min read 08 Aug 2023, 11:05 PM ISTRevenue from operations stood at ₹52,991 crore, a 9% decline from a year earlier
PremiumHindalco Industries Ltd, the flagship of the Aditya Birla group, on Tuesday said consolidated net profit in the June quarter fell 40% from a year earlier to ₹2,454 crore as revenues declined.
Revenue from operations stood at ₹52,991 crore, a 9% decline from a year earlier. Consolidated earnings before interest, tax, depreciation, and amortization (Ebitda) stood at ₹6,109 crore, and the Ebitda margin at 11%.
Among segments, revenue in the upstream aluminium business was ₹8,064 crore, down 7.29% from the previous year. Segment Ebitda stood at ₹1,935 crore, down 40% over the same period last year. In the downstream aluminium business, revenue stood at ₹2,435 crore, a 12.3% decline.
Revenue at Hindalco’s overseas subsidiary Novelis fell 14.5% to ₹33,606 crore on fewer shipments and lower-than-average aluminium prices.
“Total shipments of flat rolled products were at 879 kilo tonnes (kt) in Q1 FY24 vs 936 kt in Q4 FY23, down 6% QoQ (quarter -on-quarter) due to lower beverage can shipments and unfavourable economic conditions impacting some specialities markets mainly in building and construction, partially offset by record automotive shipments," the company added in a statement.
Revenue from the copper business rose 9.2% from ₹10,529 crore to touch ₹11,502 crore, but Ebitda fell 6% to ₹531 crore from ₹565 crore. “The copper business, in spite of the fact that we had a shutdown, still had record sales of 118 kt because we made up the shortfall of cathodes by importing and then converting to raw... In the Indian market, copper demand was very strong," said Satish Pai, managing director of Hindalco.
Hindalco shares closed at ₹455.05 on the BSE on Tuesday, down 2.08% from their previous close.
Raw material expenses fell to ₹31,786 crore in the first quarter from ₹35,313 crore a year earlier. Power and fuel costs also saw a decline, down from ₹4,018 crore to ₹3,757 crore. The company is confident that costs will decrease further as raw material prices cool.
“Our cost of production is going down. So, this quarter, it was 2% down compared to last quarter. And next quarter, it’s going to be down another 3%. So, coal availability and coal prices are coming down. Our costs are also coming down, and we are quite confident about the next few quarters," Pai added.
Pai said the company will push ahead with its ₹5,000 crore capital expenditure plan for the current fiscal, despite the decline in revenues.
“We have got a good treasury (and) a good balance sheet. So, we are investing in the downstream side of the business, both in aluminium and copper. And we intend to stick with our capex plan because the market demand is very strong for downstream parallel products...," he said.
As part of the plan, the company has around ₹2,500 crore to complete the Silvassa extrusion plant and more than ₹2,000 crore in the Sambalpur downstream rolling mill expansion. “So, most of our capex is on the downstream, and we are also starting the integrated copper tube factory outside of Baroda," Pai said.
The company has suspended the plan for capex in China, Pai said. “We had planned a ground-free capex in Zhejiang, which we have put on hold right now because we are watching the macroeconomic situation. We will decide on that probably in a year’s time. We don’t want to put new capex in right now," he added.
