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Business News/ Companies / Hindalco Q1 net profit falls 67% to Rs107.19 crore
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Hindalco Q1 net profit falls 67% to Rs107.19 crore

Revenue from operations rose 7% on the back of higher volumes to Rs8,575 crore from Rs7,996 crore a year ago

Finance costs during the period were sharply higher by 78% at Rs602 crore from Rs338 crore in the comparable quarter last year. Photo: AFP Premium
Finance costs during the period were sharply higher by 78% at Rs602 crore from Rs338 crore in the comparable quarter last year. Photo: AFP

Mumbai: Hindalco Industries Ltd, the metals flagship company of the Aditya Birla Group, on Friday reported a 67% drop in its stand-alone net profit for the June quarter because of higher finance costs.

For the fiscal first quarter, Hindalcoreported a stand-alone net profit of 107.19 crore compared with 327.50 crore in the year-ago period. Revenue rose 7% to 8,575 crore from 7,996 crore a year ago.

Finance costs during the period were sharply higher by 78% at 602 crore from 338 crore in the comparable quarter last year.

In a Bloomberg poll, 22 brokers had estimated net sales of 8,968.5 crore and 19 brokers had estimated a net profit of 163.7 crore.

“The underlying performance remains intact, in fact shows signs of improvement over the same period last year. High finance costs are on expected lines..," said Debnarayan Bhattacharya, managing director, Hindalco Industries.

Prices of aluminium and copper declined during the quarter, which hurt the company’s earnings from sales. Aluminium prices in the domestic market were 5% lower year-on-year, the company said. Copper prices traded on the London Metal Exchange (LME) fell 11% year-on-year.

“Going forward, the operational performance is expected to be robust with the ramp up of new facilities. Adverse metal realization may pose a significant turbulence in the near term," the company said in a statement to the BSE.

The aluminium business contributed 3,966 crore to the total revenue in the June quarter against 3,011 crore in the same period last year, supported by higher volumes. In the copper business, revenue declined to 4,614 crore from 4,990 crore a year ago mainly because of price decline. LME copper prices declined 11% in the period.

“Realization for the aluminiun business has fallen and is expected to remain under pressure as globally excess supply is expected for 2015 and 2016. The copper business is likely to maintain performance," Bhattacharya said.

The company also looks to start mining at the three of the four mines it won in the recent round of coal auctions next month, while a full ramp-up will take longer.

“The operational performance this quarter was better than expected, however, the situation is likely to worsen in the coming quarter as we have seen a further fall in LME prices," said an analyst from a domestic brokerage firm, who did not want to be identified as he is not authorized to comment on individual companies.

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Published: 14 Aug 2015, 02:13 PM IST
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