Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  Q2 to pave way for Hindalco’s recovery: Birla
BackBack

Q2 to pave way for Hindalco’s recovery: Birla

Hindalco Industries Ltd expects its second quarter performance will pave the way to recovery as all of its aluminium upstream plants continue to operate at near full capacity

In FY 2019- 20, Hindalco delinked about 80% of its consolidated earnings before interest and taxes from the London Metal Exchange prices Photo: BloombergPremium
In FY 2019- 20, Hindalco delinked about 80% of its consolidated earnings before interest and taxes from the London Metal Exchange prices Photo: Bloomberg

Mumbai: Hindalco Industries Ltd expects its second quarter performance to pave the way for a recovery, considering that all its aluminium upstream plants are operating nearly at full capacity. Aluminium production is recovering rapidly to pre-covid levels, with all logistics infrastructure back on track, Aditya Birla group chairman Kumar Mangalam Birla told shareholders at the annual general meeting.

“All aluminium downstream plants are operating at partial capacity to meet market conditions. The export demand remains stable and continues to offset the subdued domestic market conditions," Birla said. “The copper facilities are also ramping up to their optimal levels. At Novelis, all plants are operational, and many are now running at full capacity. All the automotive customers in North America and China are now pulling at nearly pre-covid levels," he said.

In FY20, Hindalco had delinked 80% of its consolidated earnings before interest and taxes from the London Metal Exchange (LME) prices.

“Despite the slump in Q1 gross domestic product (of the Indian economy), the activity levels are gradually normalizing. I remain confident that India’s long-term growth potential remains intact despite the covid-19 setback," Birla said.

“For Hindalco, I expect Q2 to be better than Q1. We should be back to pre-covid levels in H2FY21," he said. Birla said the company has earmarked $450-500 million as capital expenditure for Novelis for FY21, and 1,500 crore for Hindalco’s domestic operations. The company will cut fixed costs by 15% in FY21.

“On a broader level, our strategy of improving business sustainability by reducing our exposure to LME price fluctuations and increasing the share of downstream value-added products across businesses is playing out well," Birla said.

“Your company will continue to strengthen the balance sheet through growth strategies and generating positive free cash flows. What continues to hurt the domestic aluminium and copper industry is low-cost imports. In response, the company is maintaining a relentless focus on better efficiencies and cost competitiveness," he said. “All of our smelters continue to be in the first quartile of the global cost curve. Cash conservation and maintaining adequate liquidity will help us deliver sustained performance despite the current tough environment due to covid-19," Birla added.

In FY20, Hindalco reported consolidated EBITDA of 15,536 crore on a turnover of 1,18,144 crore and achieved its highest-ever production and shipment of aluminium upstream and copper value-added products when both aluminium and copper sectors faced a volatile and challenging year globally, primarily due to rising trade barriers and uncertainty surrounding trade and geopolitics. The prolonged US-China trade war dampened global economic sentiments which in turn affected aluminium consumption through the 2019 calendar year. Despite this, Birla noted that Hindalco continued to achieve record aluminium production levels at 1.314 million tonnes and alumina production of 2.735 million tonnes in FY2019-20. The company also completed the acquisition of US-based Aleris last fiscal at an enterprise value of $2.8 billion, which will add aerospace and specialty aluminium capabilities to Novelis’ portfolio, while making the parent company the leading aluminium value-added player in the world.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 10 Sep 2020, 08:06 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie