Hindalco posts lower Q4 profit fall; shares gain
Penalty proceedings against Vodafone will proceed once the Finance Bill is passed, company could have to pay up to Rs 20,000 crore in claim, penalty and interest, Gujral said.
Hindalco Industries posted a lower-than-expected 9.6 per cent drop in quarterly profits, sending its shares up nearly 2 per cent, as better volumes and higher other income helped limit the impact of volatile input costs.
The non-ferrous metals producer, part of the diversified Aditya Birla Group, said rising energy costs and volatility in metal prices pose a significant challenge but it hopes to contain cost pressures through operating efficiencies.
"Our near-term outlook remains cautious," said Hindalco's Managing Director Debu Bhattacharya.
"Aluminium prices are likely to remain subdued, while India-specific cost pressures continue. Our interest costs will also go up significantly as project expansions kick in," he said.
Hindalco reported quarterly net profit of Rs 6.4 billion for its Indian operations, compared with net profit of Rs 7.08 billion a year earlier.
Analysts on average had expected profit of Rs 4.79 billion for the company's fiscal fourth quarter, Thomson Reuters I/B/E/S showed.
Net sales rose 15 per cent to Rs 75.63 billion.
Shares in Hindalco, valued by the market at $4.1 billion, closed up nearly 2 per cent after the earnings announcement, in a Mumbai market that fell more than 2 per cent.
The stock has traded little changed so far in 2012, compared with a nearly 7 per cent rise in the BSE Sensex.
"We expect margins to remain under pressure as we don't see costs coming down in the near future. There is also a lack of clarity on their expansion projects," said Bhavesh Chauhan, analyst at Mumbai's Angel Broking.
The aluminium business, which accounts for a third of revenues but boasts higher margins, reported a 14 per cent decline in profits from a year ago, mainly due to a jump in input costs and lower prices, the company said.
The lower margin copper segment, which accounts for two-thirds of the total revenue, saw profits jump on better volumes and higher processing gains.
Non-ferrous metal prices have remained under pressure globally over the past few months on demand uncertainties because of the festering euro zone debt crisis and softening Chinese demand.
Copper futures on the London Metal exchange were trading around $8,127 per tonne, having risen roughly 8 per cent so far in 2012. Aluminium futures, at $2,063 a tonne, are up barely 3 per cent this year.
The company, which is trebling aluminium production capacity in India to 1.9 million tonnes by 2013 at a cost of about $5 billion, said all project expansions were on track.
Hindalco's U.S.-based subsidiary, Novelis, which is the world's largest producer of rolled aluminium products, has earlier projected earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.05 billion to $1.08 billion for the fiscal year ended March 31, 2012.
Novelis will report its full year earnings on May 22.
Copyright @ Thomson Reuters 2012