London: Aluminium losses, rising costs and the weakening rupee hit India-focused miner Vedanta Resources’s profits in the the first six months of its financial year, despite higher sales and prices.
Vedanta said its underlying attributable profit dropped more than 34% to $186.3 million, below expectations, sending its shares down as much as 8% in early trade. Its attributable profit fell 92%.
That was despite a 27% increase in first-half core profit to $1.7 billion, in line with analysts expectations, and a 43% rise in revenue as commodity prices rose.
The Indian headquarters of Vedanta Resources Plc, which houses the company’s Sterlite Industries (India) Ltd. unit, in Mumbai. Bloomberg.
At 0830 GMT Vedanta’s shares were down 5.6% at 1,180 pence, off earlier lows and compared with a 2% drop in the broader FTSE mining sector.
“We feel the operational side of this morning’s release represents a solid result. However, investors are likely to focus on the less encouraging ‘below the line´ factors resulting in a 47% drop in underlying EPS,” analysts at Liberum said.
Vedanta is in the final throes of completing its long-awaited deal to take control of oil explorer Cairn India from Cairn Energy, turning the miner into a fully diversified resources group, after securing approval from the government and shareholders.
But the deal has inflated the group’s net debt, which stood at $7.2 billion at the end of the period, with a gearing ratio of 36.9%.
The group said it expected to complete the deal by the end of the current quarter.
Vedanta has come under pressure in recent months from its high leverage, falling prices and operational headwinds in key commodities like iron ore. Its share price has dropped almost 40% since the end of June against a 19% drop in the FTSE 350 mining sector.