12 November 2016

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PBDT doubled to Rs 899 crore compared to Rs 447 crore in Q2 FY16

• Aluminium
  • Robust operational performance in a challenging macroeconomic environment on the back of efficiency gains and lower input costs.
  • Improved visibility over coal sourcing and cost. Major portion of requirement secured through linkages.
• Copper
  • Copper performance rebounded strongly post successful completion of planned maintenance shutdown.

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

Second Quarter Highlights:

The company registered Revenues of Rs 9,562 crore, PBITDA (Profit before Interest, Tax, Depreciation and Amortisation) was up 39% at Rs 1,493 crore and Net Profit jumped 255% to Rs 440 Crore.

YOY…

• Aluminium production increased 19% to 321 KT (Kilo Tonne), significant cost efficiencies achieved across the plants. Inputs costs were largely supportive though crude derivative prices hardened sequentially.

• Aluminium Value Added Products (FRP and Extrusions) - up 8%, Wire Rod Production increased 36% reflecting the Company's focus on power and other growth sectors.

• Delivered highest ever quarterly Copper production at 106 KT, after successful planned annual maintenance shutdown. Improved efficiencies helped offset sharp decline in sulphuric acid prices.

Financial Highlights:

(In Rs. crore)	Q2FY17	Q2FY16	Q1FY17	H1FY17	H1FY16
Revenue from Operations	9,562	9,561	8,159	17,721	18,734
Profit Before Interest, Tax and Depreciation (PBITDA)	1,493	1,074	1,351	2,844	2079
Depreciation	352	299	338	690	630
Finance Costs	594	627	600	1,194	1231
Profit before Exceptional Items and Tax	547	148	413	960	218
Exceptional income/(expense) - net	85	-	-	85	-
Profit before Tax from continuing operations	632	148	413	1045	218
Tax Expenses	193	24	119	312	33
Profit from continuing operations	439	124	294	733	185
Profit/(loss) from discontinued operations (net of tax)	0.80	(0.26)	(0.20)	0.60	(0.55)
Net Profit	440	123	294	734	185
Basic EPS – Rupees	2.14	0.60	1.44	3.58	0.90

Revenues for the quarter were broadly stable, as the impact of higher aluminium revenues was largely negated by a sharp decline in copper realisation. YOY, aluminium revenues were higher by almost 10% (excluding Utkal and Y-O-Y and if we include Utkal it is 9%) on the back of strong volume growth, however a 9% drop in copper revenues negated this increase. The copper revenues declined due to decline in copper LME, along with lower premium and lower co-product prices (sulphuric acid and DAP).

The average LME (USD) for aluminium was mildly supportive (up by 2% YoY) along with a weaker Rupee; the local market premium was sharply lower (down 34%). The copper LME was lower by 10% vs. Q2FY16. Continued surge in imports of aluminium in the country also adversely affected the results.

The cost of most inputs continued to remain benign, though prices of crude derivatives increased marginally with a rise in crude prices. Coal cost increased marginally due to a decline in quality during the monsoon season. Alumina costs were also higher for standalone Hindalco as the transfer price is linked to alumina index prices, which rose sequentially. However, this price increase benefitted Utkal Alumina International Limited, the wholly owned unlisted subsidiary of the Company.

Y-O-Y, quarterly PBITDA at Rs 1,493 crore was higher by 39%. This reflects a robust operational performance, notwithstanding the macro- economic headwinds. Depreciation and finance charges at Rs 946 crore against Rs 926 crore in Q2FY16 were marginally higher. Profit before tax for the quarter at Rs 547 crore (before exceptional items) was much higher than that in the corresponding quarter of the previous year driven by strong operational gains. Net profit for Q2FY17 at Rs 440 crore, was significantly better than that in Q2FY16.

Compared to Q1FY17, Revenues from Operations were up by 17% mainly on account of higher volumes in both aluminium and copper segments. PBITDA rose 11% led by the copper segment's enhanced performance. Sequentially, Net Profit rose 50%.

Following a notification issued by the Ministry of Coal making applicability of contribution to District Mineral Foundation effective retrospectively from 12th January, 2015, a one-time provision of Rs 60 crore has been made during the current quarter and is included in exceptional items.

Hindalco has adopted Indian Accounting Standards (Ind –AS wef. April 1, 2016 as mandated by the Ministry of Corporate Affairs. Figures for comparable period have been revised to comply with Ind-AS.

Segmental Results:

(In Rs. crore)	Q2FY17	Q2FY16	Q1FY17	H1FY17	H1FY16
Aluminium Segment
Sales	4,930	4,496	4,591	9,521	8,766
Results	808	277	871	1,679	818
Copper Segment
Sales	4,635	5,071	3,571	8,206	9,978
Results	366	366	264	630	730

Aluminium Business:
During the quarter, Alumina production (including Utkal Alumina) at 726 KT was 16% higher vis- a-vis that in Q2FY16. Aluminium metal production stood at 321 KT and was up 19% on YoY basis. Higher production, improved efficiencies, with the stabilisation of operations and supportive input costs resulted in a higher EBITDA of Rs 808 crore, an increase of 192% over the corresponding quarter of the previous year.
For the half year ended September 30, 2016, Aluminium production at 687 KT augmented by 14% as the new plants ramped up to designated capacities.
The standalone financials do not include financial performance of Utkal Alumina

Copper Business:
The Copper Business performance rebounded smartly owing to higher volumes and efficiency gains after the planned maintenance shutdown during the first quarter of the current financial year. Not only did it deliver the highest ever cathode volumes at 106 KT, but the efficiency gains allowed offsetting the impact of a sharp decline in co-product prices, especially sulphuric acid, which were lower by around 30% as compared with those in Q2 FY16. Y-O-Y, the Copper segment EBIDTA at Rs 366 crore was stable and 38% higher on sequential basis.

The divestment of Aditya Birla Minerals Ltd (ABML), Australia was completed during the quarter. The transaction yielded a gain of Rs 145 crore and is included in exceptional items. The total cash consideration from this deal was Rs 367 crore.

Coal Security:
The Company secured a good portion of its coal requirement so far in the recent 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. This is a significant development, considering the Company's cost effective alumina value chain, including Utkal, which will help bolster cost competitiveness.

Utkal Alumina International Ltd [UAIL]:
The alumina refinery at UAIL produced 375 KT of alumina in Q2 FY17 compared to 338 KT in Q2 FY16. The cost of production of alumina at UAIL is comparable to the world benchmark cost of production. UAIL EBITDA during the current quarter was Rs. 170 crore.
(Considering the fact that Utkal serves as a captive supplier of alumina to Hindalco, the numbers are not simply additive for ascertaining financial performance on a combined basis.)

The Company delivered robust operational performance in a challenging macroeconomic conditions. Its operational performance was also supported by benign energy prices and some recovery in the aluminium prices. The macroeconomic headwinds still persist and the uncertain global macro factors pose several challenges. The price recovery is vulnerable to imminent Chinese capacity additions and smelter restarts. The high level of imports continue to impact domestic sales volumes. Hindalco remains focussed 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