Hindustan Copper (513599) Q4 04/05 earnings summary

Executive summary

• Returned to profitability after ~8 years: FY05 PBT was ₹52.06 crore versus a ₹56.16 crore loss in FY04; reported PAT was ₹55.98 crore, including a ₹3.92 crore deferred-tax credit.

• Improved results reflected higher copper prices, production-process improvements, VRS-led manpower rationalisation, lower interest costs and other cost reductions.

• Cash profit was ₹84.80 crore versus a cash loss of ₹25.90 crore in FY04; no dividend was recommended.

Financial highlights

• Turnover rose to ₹559.11 crore from ₹518.87 crore; value of production increased to ₹631.24 crore from ₹534.43 crore.

• PBT improved to ₹52.06 crore from a ₹56.16 crore loss; interest expense fell to ₹42.99 crore from ₹59.63 crore, while depreciation and provisions were ₹32.74 crore versus ₹30.26 crore.

• Net sales after excise were ₹482.75 crore; grant-in-aid income was ₹26.56 crore, matched by VRS expense of the same amount.

• Operating cash flow after VRS expenditure and government grant was ₹115.55 crore, versus an outflow of ₹75.71 crore in FY04.

Outlook and guidance

• FY06 priorities: raise mine output and development, advance Banwas Block shaft sinking, improve smelter yield and recovery, and increase plant availability.

• Planned cost and productivity actions include lower power, fuel and oxygen use, reduced inventory, asset and scrap disposals, manpower rationalisation, outsourcing where appropriate, and loan restructuring to cut interest costs.

• Management targeted a decisive turnaround in FY06 and sustainable profitability through stronger infrastructure and operating efficiency.

• PMR Plant was scheduled to resume production from July 2005; KCC smelter/refinery returned to service on 20 April 2005 after overhaul.