Hindustan Copper (513599) Q4 07/08 earnings summary

Executive summary

• FY 2007-08 turnover reached a record Rs 1,839.79 crore, up 2.23% YoY; copper sales volume rose 7.28% to 45,384 tonnes, while PAT fell to Rs 246.46 crore from Rs 313.94 crore.

• Production exceeded targets for ore, metal in concentrate, cathodes and CC wire rod; cathode and CC wire rod output reached multi-year highs.

Financial highlights

• Sales were Rs 1,839.79 crore versus Rs 1,799.64 crore; PBT was Rs 302.50 crore versus Rs 331.83 crore; PAT was Rs 246.46 crore versus Rs 313.94 crore.

• Cash profit was Rs 316.55 crore versus Rs 387.10 crore; basic EPS was Rs 3.21 and diluted EPS Rs 2.76, based on Rs 5 face-value shares after the capital reduction.

• Lower net realization, driven chiefly by rupee appreciation and customs-duty changes, pressured earnings; average USD exchange rate was Rs 40.54 versus Rs 45.50 in FY 2006-07.

Outlook and guidance

• FY 2008-09 priorities: increase mine production, improve process-plant efficiency, streamline procurement and disposal, and roll out ERP across units and functions.

• Indian copper demand was projected to grow ~8% annually; global demand growth of 3-4% and high copper prices were expected to support the outlook, subject to volatility.

• Banwas deposit development was planned with a mining partner; estimated annual output potential was 15,000 tonnes of copper metal in concentrate from reserves of ~22.5 million tonnes at 1.69% copper.