India-focused miner Vedanta Resources Plc gave a sturdy outlook for commodity markets, bucking the trend among peers, even as aluminium losses, a weak rupee and higher interest payments hit profit.
Core profit for the year to March, however, rose 13% to meet forecasts, thanks to higher profits from zinc and oil producer Cairn India Ltd, acquired last year.
“The outlook for natural resources remains robust,” chairman Anil Agarwal said on Thursday, adding that Vedanta, with a low-cost structure and an Indian asset base, was well-positioned to serve Asia’s third largest economy. Vedanta, the largest aluminium producer in India, expects double-digit growth in aluminium demand there.
Other major miners have been cautious in recent weeks, with the world’s largest, BHP Billiton Plc, telling investors on Wednesday it expected markets to cool further as investors lose confidence in the longer-term health of the global economy. BHP also backed away from a major spending plan.
Vedanta chief executive M.S. Mehta said it had reached an inflection point with its own $18 billion spending programme.
“We are very comfortable, having completed a large part of our journey ... We have always maintained structurally low costs in most of the sectors where we are present,” he told reporters when asked about his confident outlook. “These two give us a unique positioning.”
Vedanta’s full-year attributable profit fell 46% to $387 million, in line with expectations, as it suffered the impact of power outages at its aluminium unit, a hit from a volatile rupee on borrowing by Indian units, and higher interest payments as a result of the $8.7 billion Cairn deal.
Spending on Cairn India lifted net debt to $10.1 billion.
Earnings before interest, tax, depreciation and amortisation (Ebitda), however, rose 13% to $4 billion for the year, largely thanks to a $713 million contribution from Cairn that helped offset iron ore woes.
Vedanta last month reported a drop in full-year iron ore output, hit by a ban on mining in Karnataka and logistical bottlenecks in nearby Goa that dented a key profit contributor. Vedanta said the Karnataka ban, to crack down on illegal mining, was being heard by the Supreme Court and expected a resolution soon. The next hearing will be in July.