Hindalco Industries’ standalone profit more than doubled to Rs 356 crore in the quarter ended March 2016, up 123.3% from the corresponding period last fiscal mainly because of lower input costs even as net sales took a hit due to falling aluminium and copper prices.
Net revenues for the Aditya Birla Group company stood at Rs 8,542 crore in the period under review, down 7.33% from the same quarter last fiscal as realisations dropped with average fall in aluminium and copper prices on London Metal Exchange (LME) at 16% and 20%, respectively.
As per Bloomberg estimates, Hindalco’s net profit was seen at Rs 51.4 crore,while revenues were expected to be at Rs 8,501 crore.
“The low cost of raw materials, especially energy inputs was a major relief during the quarter,” said the company in a release. Total expenses slipped 11% in the quarter to Rs 7,842 crore, lending support to the operating profit which moved up 35% on an year-on-year basis to Rs 825 crore.
In the aluminium business, the impact was more severe due to a sharp fall in the local market premium, which declined by around 75%, and a sharp surge of aluminium imports in the country, a company statement said.
However, a strong increase in aluminium volumes following the increased production and thrust on value addition across businesses helped the company offset the impact of sharp fall in realisations, it said. A weak rupee also came to the rescue of the topline as it helped further offset the impact of declining LME prices.
Due to this, Hindalco’s earnings before interest and tax (EBIT) increased 69% on year-on-year basis to Rs 517 crore in the March quarter. The company upped its alumina production by 11% from last year to 703,000 tonne.
In copper, despite all the initiatives for value maximisation, the EBIT fell 6% on year-on-year basis in the March quarter to Rs 377 crore primarily on account of the abolition of certain export incentive scheme during the year and challenging market conditions.
“While the macroeconomic headwinds persist, the uncertain global macros pose several challenges, the company in the meanwhile, continues with its un-relented focus on operational excellence, enhanced value addition and cash conservation to tide over these circumstances,” said Hindalco Industries.