Aluminium major ’s September quarter profit declined as the company’s input costs surged even as the price of the silvery-white metal corrected during the quarter.
The Aditya Birla Group company reported a consolidated profit of Rs 2,205 crore, down 35% year-on-year and 46% sequentially. Aluminium prices had reached historically high levels during the preceding quarter before getting closer to the long-term average during Q2.
The stock of Hindalco gained 3.53% to close at Rs 429.75 in a buoyant Mumbai market that ended nearly 2% higher. The earnings were disclosed during trading hours.
Consolidated revenue during the quarter was higher by 18% year-on-year and marginally lower sequentially at Rs 56,176 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) were down 29% year-on-year to Rs 5,362 crore. EBITDA margin was at 9.5% compared to 15.9% in the year-ago period.
The main impact came from the power and fuel costs that almost doubled year-on-year to just over Rs 5,000 crore.
Novelis, the US-based subsidiary of Hindalco, contributed around two-thirds to the consolidated EBITDA during the quarter, with its performance marginally lower year-on-year. However, EBITDA from the Indian aluminium business dropped sharply to Rs 1,347 crore on the back of high input costs.
The company said that demand for aluminium in India during the quarter was robust and it produced the highest-ever volumes. There was “no noticeable slowdown in India,” Satish Pai, managing director, Hindalco, said in a post-earnings media call.
However, a slowdown in the US could be a concern going forward. But Pai said that about 60% of Novelis’ business came from the aluminium cans business, which is “recession-proof.”
In India, coal and energy contribute about 40% to Hindalco’s costs. The cost of the black commodity is likely to have peaked in India and should soften going forward, Pai said.
Hindalco will be committing capital expenditure to the tune of Rs 2,500 crore compared to the guidance of Rs 3,000 crore given at the beginning of the year. Pai said that this was due to an unexpected slowdown in getting clearances and equipment.
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