World’s largest zinc and lead producer Hindustan Zinc on Friday reported a 20.2% decline in its net profit to R1,413 crore for the quarter ended March 31, 2012, as lower price of the metals undermined the company’s profitability. The company had posted a net profit of Rs 1,771 crore in the March quarter of 2010-11. The Vedanta group firm’s net sales saw a 3% dip to Rs 3,135 crore during the period.
Zinc prices have declined by 15% during the quarter over last year while lead prices have seen another 20% drop. This saw the firm’s operating margin slip to 52.3% during the quarter against 60.1% during the same period last year.
Prices of the two commodities that account for over 80% of the company’s turnover, are unlikely to see a major increase in the near future as there is enough supply in the market.
The company has said its production would be slightly lower in the first six months of fiscal 2012-13 over the previous year but it will pick up in the second half to make up for it.
For the full financial year 2011-12, the company saw a 13% increase in net profit at R5,526 crore and a 14% increase in sales at Rs 11,405 crore.