Hindalco Industries (HINDALCO) Q4 02/03 earnings summary

Executive summary

• FY03 marked a strategic shift into integrated copper through the Indo Gulf copper-business merger and Australian Nifty mine acquisition; Indal ownership rose to 95.9%.

• Despite weak markets, power disruptions and input-cost pressure, revenue was Rs 49,755 million and operating profit Rs 12,141 million; net profit after extraordinary items was Rs 5,821 million.

• Aluminium contributed 48% of revenue and 66% of profit; copper contributed the balance, with strong production and export volumes.

Financial highlights

• FY03 net sales Rs 49,755 million vs Rs 23,314 million in FY02; comparison is not meaningful after the copper business was included for the full year.

• Operating profit was Rs 12,141 million; profit before tax and extraordinary items was Rs 10,627 million, vs Rs 10,050 million in FY02.

• Net profit before extraordinary items was Rs 7,455 million; after Rs 1,633 million of extraordinary losses, net profit was Rs 5,821 million.

• FY03 exports reached Rs 10,283 million vs Rs 3,374 million; figures include the acquired copper business and are not comparable with FY02.

Outlook and guidance

• Aluminium FY04 metal production expected to rise 20–25% following brownfield expansion; lower cash costs, margin recovery and Indal synergies expected to support earnings.

• Copper smelter expansion from 150,000 to 250,000 TPA expected in H1 FY04, supporting 25–30% higher volumes; Nifty freight savings of US$35–40 per tonne expected from mid-FY06.

• FY04 outlook called for improved profitability and returns; further low-cost Dahej copper expansion was under evaluation.

• Near-term aluminium prices were forecast at US$1,350–1,400/tonne; domestic copper demand growth was expected at 3–5%, with export markets central to growth.