London: Officials at Vedanta Resources Plc., the largest manufacturer of copper and zinc in India, said the company’s first quarter earnings gained 18% because of increased metal prices and production.
Earnings before interest, depreciation, tax and amortization rose to $695.4 million (Rs2,802 crore) in the three months ended 30 June, from $589 million in the year-ago period, the London-based company said on Thursday. Sales rose 42% to $1.85 billion.
Copper, aluminium and zinc prices gained in the quarter, buoyed by demand from Asia. India’s gross domestic product has expanded at a record 8.6% average pace since 2003, faster than any other major economy except China.
“Costs pressures were slightly higher than forecast,” Paul Galloway and Grant Sporre, analysts at UBS AG in London, said in a report.
Earnings were 3% below the investment bank’s forecast of $716 million. UBS maintained its “Buy 2” rating on the stock with a price target of 2,000 pence in next 12 months.
Vedanta shares were trading at £1,766 (Rs1.47 lakh) at 2pm London time—down 4.76%. The stock has gained 39% in the past 12 months.
Prices of alumina, the raw material smelted to make aluminium, rose in the quarter, increasing production costs at the division that makes the lightweight metal, Vedanta officials said. Still, the division’s earnings increased by 67% to $110.2 million because of higher aluminium prices and increased output.
Production of aluminium rose 28% to 97,000 tonnes, Vedanta said. Zinc output increased 13% to 93,000 tonnes. Production of copper cathode, a finished form of the metal, rose 42% to 81,000 tonnes at Vedanta’s Indian units.
Copper for immediate delivery on the London Metal Exchange cost an average of $7,645 a tonne in the quarter, 5.2% more than the year-ago period. Aluminium prices rose 4.2% to an average of $2,766 a tonne and zinc costs rose 12% to $3,685 a tonne.
The Lanjigarh alumina refinery started production using outsourced bauxite at an annual capacity at 1.4 million tonnes, Vedanta said.
The company still needs environmental clearances from the Supreme Court before it can develop its own mine in the area.
Vedanta bought a 51% stake in Sesa Goa Ltd, India’s biggest non-state iron ore exporter, for $981 million in April.