Mumbai: National Aluminium Co., India’s biggest alumina maker, reported a decline in profit for the first time in 17 quarters because of a slump in prices of the material used to make aluminum.
Net income fell to Rs5.91 billion ($144 million) in the fourth quarter ended on 31March from Rs6.05 billion a year earlier, Chairman C.R. Pradhan said. Five analysts surveyed by Bloomberg News had forecast a profit of Rs5.70 billion.
Prices of alumina were 47 % lower on average in the March quarter from a year ago because of rising output in China, the world’s biggest producer of the metal. Earnings may fall for a second straight quarter ending June as China is set to surpass Australia this year as the world’s biggest alumina producer to meet a 25 % growth in aluminum demand.
Rs.We will see a drop in profit in the current quarter as well on lower alumina prices,’’ Priyadarshi Srivastava, head of institutional sales at Mumbai-based Niche Brokerage Pvt., said. Rs.We are not very bullish on the stock.’
China’s output of alumina rose by 65 % in March to 1.7 million tons, and was up 54 % to 4.3 million tons in the first three months. The nation’s imports of bauxite ore may exceed 14 million tons this year, Macquarie Bank Ltd. said in a report last month. Aluminum is made from alumina, a processed commodity that comes from bauxite.
Smelters need two tons of alumina, a white powder refined from bauxite, to make one ton of aluminum.
Prices of alumina in the European Union have recovered to $360 a ton this month from $205 a ton in December, according to Metal Bulletin. Still, they’re below the $627.5 a ton peak set on 31 March last year.
Rs.Prices will remain sluggish and will trade between $380 and $400 a ton,’ Pradhan said. National Aluminium aims to sell 80 % of its output through long-term contracts this year to shield itself from volatility in spot-market prices, he said.
The company may secure a license from the government for a bauxite mine in the eastern Orissa state, which holds half of the nation’s reserves of the material. The mine has reserves of 90 million tons, Pradhan said.
Alumina output fell to 1.48 million tons in the year ended March from 1.58 million tons year earlier because of a planned shutdown of one its smelters for maintenance, Pradhan said.
The shares fell as much as Rs6.65, or 2.7 %, to Rs239.55 on the Bombay Stock Exchange and traded at Rs252.7 at 2:10 p.m. local time. The stock has fallen by 15 % in the past year.