Hindustan Copper (513599) Q4 05/06 earnings summary

Executive summary

• FY 2005-06 turnover rose 88.47% YoY to Rs 1,053.76 crore and net profit increased 89% to Rs 105.89 crore; refined copper sales reached a record 38,631 tonnes.

• Profitability benefited from higher sales and copper prices, plus extraordinary income from the sale of Mosabani and Rakha township assets; mine output remained constrained by low ore grades and development backlogs.

Financial highlights

• Turnover was Rs 1,053.76 crore vs Rs 559.11 crore; profit before tax was Rs 100.22 crore vs Rs 52.06 crore, and net profit was Rs 105.89 crore vs Rs 55.98 crore.

• Profit before interest, depreciation, provisions, write-offs and tax was Rs 161.87 crore vs Rs 127.79 crore; cash profit was Rs 123.33 crore vs Rs 84.80 crore.

• Extraordinary income of Rs 54.26 crore arose from the sale of Mosabani and Rakha township assets; extraordinary expenses were Rs 42.82 crore, including fuel surcharge, water cess and prior-period pay.

• Basic EPS was Rs 1.45 and diluted EPS Rs 1.38, compared with Rs 1.25 and Rs 0.75, respectively, in FY 2004-05.

Outlook and guidance

• For FY 2006-07, priorities were to raise mine output, improve process-plant efficiency, clear mine-development backlogs at MCP and KCC, streamline procurement and reduce operating costs.

• Copper prices were expected to remain high and above breakeven levels despite volatility; domestic copper demand was expected to strengthen with economic and manufacturing growth.

• Plans included reducing interest expense through loan repayment and restructuring, improving smelting and refining yields, and optimizing logistics and plant availability.