Hindalco beats Street, Q1FY23 profit up 48%
- US subsidiary Novelis contributed more than half of its operating profit
Aditya Birla group flagship Hindalco Ltd on Wednesday said its consolidated net profit in the June quarter rose 48% from the year-ago period, beating market estimates.
Net profit touched ₹4,119 crore, against consensus Bloomberg analysts’ estimates of ₹2,853 crore. The earnings were led by its US subsidiary Novelis, and supported domestically by greater profitability in copper and a good show in aluminium downstream businesses. The aluminium upstream business, however, felt some pressure on profitability due to rising costs.
Satish Pai, managing director, Hindalco Industries, said: “After the record profitability of the fourth quarter, I am pleased to share that we delivered an even stronger first quarter, despite rising input costs and inflationary pressures. Our performance was backed by strong operational efficiencies and pre-emptive sourcing of critical raw material, thus ensuring stable operations and higher margins.”
Novelis reported a record adjusted Ebitda per tonne of $583, compared to $570 a year earlier. Ebitda stands for earnings before interest, tax, depreciation and amortization.
Novelis’s revenue at $5.1 billion also grew 32% year on year, thanks to higher product pricing, a favourable product mix and higher recycling benefits. Total shipments of flat rolled products were at 962,000 tonnes versus 973,000 tonnes last year, marginally lower due to supply chain constraints. Some impact on auto segment sales also was felt due to covid-related lockdowns in China.
Hindalco’s copper segment Ebitda at ₹565 crore was up 116% year-on-year and 46% sequentially. This was on the back of higher domestic sales, better operational efficiencies and by-product margins.
Better pricing also raised Ebitda per tonne for the aluminium downstream business to $261 versus $64, up 306% year-on-year. However, the aluminium upstream business saw Ebitda at ₹3,272 crore, down 12.5% sequentially, though up 41% y-o-y. Margins declined to 38% from 41-42% in Q4FY22.
While some carried forward lower-priced coal inventory supported aluminium upstream profitability in Q1, Q2 may face more headwinds. The higher-priced coal procured in May-June will now be used in July and August. The benefits of softening coal prices will only be seen from Q3.
Hindalco reported consolidated Ebitda of ₹8,640 crore in Q1, up 27% year-on-year and 13.9% sequentially, beating Bloomberg estimates of ₹6108 crore. Revenues from operations at ₹58018 crore also beat analysts’ estimates of ₹49344 crore.
Shares of Hindalco closed at ₹440.10 on NSE, up 4.44%.
Aluminium prices that averaged around $2,800 a tonne on the LME during Q1 averaged lower at close to $2400 a tonne in July and August, Hindalco management said, portending greater pressure on aluminium upstream business in Q2.
Meanwhile, the outlook for Novelis’s business, which contributed more than half to consolidated operating profits, remains strong. The management already had revised its sustainable Ebitda per tonne guidance to $525 plus from earlier $500 plus.
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First Published:11 Aug 2022, 06:07 AM IST
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