Vedanta (VEDL) Q4 13/14 earnings summary

Executive summary

• FY14 marked completion of the merger and consolidation, creating a diversified resources portfolio; comparable adjusted pro forma results reflect a full-year basis and exclude a one-time reorganisation tax credit.

• Strong oil and zinc performance supported earnings, while iron ore restrictions, lower commodity prices and operating disruptions weighed on several businesses.

Financial highlights

• Adjusted pro forma revenue was ₹72,591 crore vs ₹71,780 crore in FY13; adjusted pro forma EBITDA was ₹25,665 crore, up 1.7%, with a 47% margin excluding custom smelting.

• Adjusted pro forma attributable PAT was ₹5,005 crore; underlying attributable PAT was ₹5,020 crore and underlying EPS ₹23.54/share. Total dividend was ₹3.25/share.

• Consolidated FY14 reported net revenue from operations was ₹66,152 crore, PAT ₹10,339 crore, attributable profit ₹6,299 crore and EPS ₹21.46; Cairn was consolidated only from 26 Aug 2013, limiting comparability.

• Cash and liquid investments were ₹50,797 crore at 31 Mar 2014; FY14 contribution to the Indian exchequer was ₹31,100 crore.

Outlook and guidance

• Zinc India FY15 mined and integrated refined metal output, including silver, expected marginally above FY14; unit costs expected stable, with mined-metal capacity targeted at 1.2 mtpa by FY17.

• Oil & gas FY15 production expected flat; three-year production CAGR target of 7–10% and reserve replacement target of 150% over three years, subject to PSC extension; planned net capex of US$3.0bn by FY17.

• Zinc International FY15 volumes expected in line with FY14 as Lisheen declines toward closure and Skorpion/BMM offset output; declining grades and higher Skorpion strip ratio remain challenges.

• Priorities include ramping aluminium and power capacity, securing bauxite and coal, resuming Goa iron ore mining after approvals, and continuing deleveraging from free cash flow.