HINDALCO INDUSTRIES Limited, the emerging metals major and flagship company of Aditya Birla Group, reported the results for the third quarter of the fiscal year 2005-06 recently.
The company’s revenues moved up by 15 per cent to Rs 2873.7 crore from Rs 2490.1 crore for the corresponding quarter of the previous year. The net profit, however, declined by 13 per cent to Rs 300.6 crore vis-à-vis Rs 347.3 crore, as the performance of the copper business was impaired due to production loses and factors beyond the company’s control.
The aluminum business clocked revenue of Rs 1564.4 crore, 16 per cent growth over the corresponding quarter.
Sustained strength in LME prices, rising volumes and higher weight on value added products were the key factors contributing to the growth. As a result, the segment profit increased by 17 per cent from Rs. 462.9 crore to Rs 542.1 crore.
The copper business revenue rose by 14 per cent from Rs 1145.4 crore to Rs 1308.4 crore on the back of a rising LME. The business faced its toughest quarter in its 8.5 year history because of difficult business conditions.
More specifically, the 180 ktpa smelter shut down for 25 days. The 250 ktpa smelter III, commissioned earlier this year, took a forced 19 day shutdown due to minor metal leakage and resultant damage to nearby equipment. On the positive side, the utilisation level of 70 ktpa smelter II improved over the Q3 FY-05 and as also sequentially over the proceeding quarter.
Lower smelter up-time and consequent decrease in production during the quarter affected the profit adversely. In addition to that, the copper business had to bear costs of repairs to the two big smelters, suffer ‘backwardation charges’ and incur high expenses on liquid fuels. Together, these factors had a significant impact on the quarter’s results.
{{/usCountry}}Lower smelter up-time and consequent decrease in production during the quarter affected the profit adversely. In addition to that, the copper business had to bear costs of repairs to the two big smelters, suffer ‘backwardation charges’ and incur high expenses on liquid fuels. Together, these factors had a significant impact on the quarter’s results.
{{/usCountry}}Hindalco is standing at an inflection point on the growth curve with both its businesses positioned to reap the benefits of scale. While the company’s aluminum business is poised for a giant leap from domestic leadership to global scale operations, in copper, the company expects better results once the production from the new smelter stabilises.