12 August 2016

Hindalco Reports First Quarter 2017 Results [Unaudited Standalone]

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PBDT -- Rs 751 Crore vs Rs 401 Crore in Q1 FY 16

• Aluminium - Strong operational performance in a challenging macroeconomic environment, efficiency gains and lower input costs helped deliver robust results

• Significant visibility over coal sourcing and cost. Around 25% annual requirement locked in during recently concluded linkage auctions at a reasonable premium to Govt. notified prices

• Copper – Lower production due to planned maintenance shutdown. Plant Ramping up smoothly post shutdown

Hindalco Industries Limited, the flagship company of the Aditya Birla Group, today announced its unaudited results for the quarter ended 30 June 2016.

First Quarter Highlights:

The company attained Revenues of Rs 7,597 Crore, PBITDA was up 34% at Rs 1351 Crore and Net Profit soared 381% to Rs 294 Crore

YOY…

• Aluminium production increased 17% to 308 KT, significant cost efficiencies achieved. Supportive input costs with decline in coal and crude derivative prices

• Strong growth in aluminium Value Added Products (FRP and Extrusions) - up 12%, Wire Rod Production increased 80% reflecting a strong focus on power sector

• Copper production was lower owing to planned annual maintenance shutdown. However, post shut down, the plant is ramping up smoothly.

Financial Highlights:

Revenues for the quarter were lower by 11% compared to the corresponding quarter of the previous financial year, due to sharp decline in realisations. In spite of the fall in aluminium realisations. YOY, aluminium revenues were higher by 8% on the back of strong volume growth, however a 28% drop in copper revenues negated this increase. A 36% decline in copper volumes due to planned maintenance shutdown along with lower realisations, negated the impact of higher aluminium revenues.

The average LME prices (USD) for aluminium and copper were lower by 11% and 22% respectively vs. Q1FY16. In Aluminium Business, the impact was more severe due to a sharp fall in the local market premium, which declined by as much as 50%. Continued strong imports of aluminium in the country also adversely affected the results.

A strong increase in aluminium volumes in line with higher production and value addition helped partially offset the impact of sharp fall in realisations. Weaker Rupee also enabled partially offset the effect of the drop in realisations. The cost of most inputs continued to remain benign for second consecutive quarter. The lower cost of raw materials, especially energy inputs, was a major relief during the quarter.

YOY, quarterly Profit before Interest, Tax, Depreciation and amortisation (PBITDA) at Rs 1,351 crore was higher by 34 %. This reflects a robust operational performance, notwithstanding the macro- economic headwinds. Depreciation and finance charges at Rs 938 crore against Rs 935 crore during Q1FY16 were broadly stable.

Profit before tax for the quarter at Rs 413 crore was sharply higher than that in the corresponding quarter of the previous year, due to strong operational gains. Net profit for Q1FY17 at Rs 294 Crore, was much better than that in Q1FY16.

Hindalco has adopted Indian Accounting Standards (Ind AS) wef 1st April, 2016 as mandated by the Ministry of Corporate Affairs. Figures of quarter ended 30th June, 2015 have been revised to comply with Ind AS.

Segmental Results:

Aluminium Business:

During the quarter, Alumina production (including Utkal refinery) at 708 KT (kilo tonne) was 10% higher vis- a vis that in Q1FY16. Aluminium metal production stood at 308 KT and was up 17% on YoY basis. Higher production, improved efficiencies, with the stabilisation of operations and supportive input costs resulted in a higher EBITDA of Rs 901 crore, an increase of 64% over the corresponding quarter of the previous year.

The standalone financials do not include Utkal’s financial performance.

Copper Business:

The Copper business financial results were impacted due lower production volumes on account of the scheduled annual maintenance shut down. YoY Cathode production for Q1FY17 at 65 KT was lower by 36%, resulting in lower sulphuric acid production. However, Fertilizer (DAP) production increased by 20% to 94 KT with the ramp up of expanded facility. On YoY basis, the EBIDTA of copper segment was 29% lower at Rs 284 Crore.

The divestment of Aditya Birla Mineral Ltd (ABML) was completed in July 2016 in line with the company’s focus on monetisation of non-core assets.

Coal Security:

The Company secured around 25% of its coal requirement in the recently concluded coal linkage auctions, at a reasonable premium to government notified price. This, along with the existing linkage for Renusagar power plant and captive coal mines will provide adequate coal security and good visibility to power cost for aluminium production. This is a significant development, considering the Company’s cost competitive alumina value chain, including Utkal Alumina, which will help bolster our cost competitiveness.

The Company delivered a robust operational performance in adverse macroeconomic conditions. Its operational performance was also supported by deflationary energy prices. The macroeconomic headwinds still persist and the uncertain global macro factors pose several challenges. The high level of imports continue to impact domestic sales volumes. Hindalco continues to focus on operational excellence, higher value addition, customer centricity and cash conservation to tide over these issues.

Statements in this “Press Release” describing the company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company assume no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.

Regd. Office: “Century Bhavan”, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 030

Website: www.hindalco.com, E mail: hindalco@adityabirla.com, Corporate Identity No. L27020MH1958PLC011238