Vedanta H1 down, sees recovery signs

Vedanta H1 down, sees recovery signs

London: India-focused mining group Vedanta Resources Plc said it saw early signs of global recovery as it posted a 44% fall in first-half earnings per share due to weaker metals prices.

“We appear to be witnessing the early signs of economic recovery globally," chairman Anil Agarwal said on Thursday. “We expect that the economic and industrial growth in India will help underpin the demand for our products."

London-listed Vedanta said earnings per share (EPS) for the six months to end September fell to 68.5 cents from 121.4 cents last year, beating a consensus forecast of 57 cents from eight analysts polled by the company.

Interest income was the main reason for better than expected EPS, while other figures were in line with forecasts, Cazenove said.

“No fireworks from VED -- solid numbers," it said in a note. “The balance sheet looks if anything overcapitalised, which suggests plenty of capacity to continue growing aggressively."

Vedanta said it had net debt of $969 million with cash and liquid investments of $6 billion.

The group -- which has operations in India, Australia and Zambia -- said its strong balance sheet allowed it to continue investing in new mines and expanding operations as other companies cut back due to the economic downturn.

“Expansionary capital expenditure in the period was $1.79 billion, in what we anticipate will be the peak year for the current organic growth programme," Agarwal said.

Vedanta shares, which have outperformed the UK mining index by 40% this year, dipped 3.3% to 2,214 pence by 0807 GMT.

Dividend up

The group proposed an interim dividend of 17.5 cents, up from 16.5 cents last year, and said it remained committed to its progressive dividend policy.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 41% to $746 million, while revenue declined 25% to $2.98 billion.

The price of metals were hit hard last year amid the global financial crisis, but have recovered some of that lost ground this year.

The price of zinc -- Vedanta’s most profitable metal accounting for half of core earnings -- has bounced 85% this year, but it is still 23% below its peak last year.

Earlier this month, Vedanta forecast higher production in the second half after it posted strong output gains for most metals in its fiscal second quarter.

Refined zinc output gained 12.5% in the first half to 280,000 tonnes, while production of iron ore, its next most profitable product, climbed 15.1% to 8.2 million tonnes.

On 29 October, Vedanta iron ore unit Sesa Goa said it was being investigated by the Indian government for financial and other irregularities.

Sesa Goa, India’s largest iron-ore exporter, said it was under investigation by the Serious Fraud Investigation Office and the probe had to be completed in six months.

Another Vedanta unit, Sterlite Energy, said on 30 October it planned a $1.1 billion IPO to help fund two thermal power plants with a combined capacity of 4,380 megawatts.