Hindustan Zinc (500188) Q4 05/06 earnings summary

Executive summary

• FY05-06 marked a record year, with expansions operationalised, higher production and sales, and lower zinc production cost despite rising input prices.

• Net profit rose to Rs. 1,472.48 crore from Rs. 655.33 crore; total revenue reached Rs. 3,992.78 crore from Rs. 2,337.20 crore.

Financial highlights

• Total revenue increased 71% YoY to Rs. 3,992.78 crore; EBITDA increased 138% to Rs. 2,417.65 crore.

• Net profit rose 125% to Rs. 1,472.48 crore; basic and diluted EPS increased to Rs. 34.85 from Rs. 15.51.

• Net sales, excluding excise, were Rs. 3,876.97 crore; other income was Rs. 115.81 crore.

• Higher volumes and metal prices supported results; average zinc LME price was US$1,614.32/MT vs. US$1,109.86, and lead was US$1,040.94/MT vs. US$920.55.

Outlook and guidance

• Approved Chanderiya expansion includes 170,000 tpa zinc smelting and a 77 MW captive power plant, with corresponding Rampura Agucha mine and ore-dressing expansion; estimated cost Rs. 1,100 crore, funded internally.

• Global zinc demand was forecast to grow ~5% long term; Indian zinc demand was expected to grow 8–10% p.a., from 420,000 MT.

• Indian lead consumption was forecast to rise from ~230,000 MT in 2005 to 265,000 MT in 2006; global lead consumption was expected to reach ~7.79 million MT in 2006.