Hindalco Industries (HINDALCO) Q4 03/04 earnings summary

Executive summary

• Record FY04 net profit of Rs 8,389 million; net sales rose 24% YoY to Rs 61,909 million, supported by higher volumes, improved aluminium margins and completed brownfield expansions.

• Strategic milestones included completing aluminium and copper expansions, acquiring Mt. Gordon mine, increasing Indal ownership to 96.5% and launching a copper smelter expansion to 500,000 TPA.

Financial highlights

• Gross sales rose 24% to Rs 68,024 million; net sales increased 24% to Rs 61,909 million in FY04.

• Operating profit increased 17% to Rs 15,149 million; profit before tax and extraordinary items rose 17% to Rs 12,457 million.

• Net profit before extraordinary items was Rs 8,389 million, up 13% YoY; adjusted for the prior-year Rs 1,633 million extraordinary charge, net profit increased 44%.

• Adjusted fully diluted EPS rose to Rs 90.7 from Rs 80.6; CEPS increased to Rs 125.0 from Rs 109.1. Proposed dividend rose to Rs 16.50/share from Rs 13.50.

Outlook and guidance

• FY05 aluminium demand in India was expected to grow 7–8%; expanded domestic supply could intensify competition and pressure market share and prices.

• Global aluminium demand was forecast to grow 7.3% in 2004; FY05 LME aluminium was expected to average $1,600/tonne versus $1,496/tonne in FY04.

• Global copper demand was forecast to grow 5% in 2004; LME copper was expected to average $2,700/tonne in CY04, with TC/RC recovery anticipated particularly in H2.

• Optimism for superior earnings and returns in the coming year rested on full-year operations at expanded facilities, Indal synergies and stronger non-ferrous demand; currency, tariff and copper TC/RC challenges remained.