Hindalco Net Profit Falls 63%

Hindalco has reported a 63 per cent year-on-year (YoY) decline in net profit to Rs 1,362 crore for the quarter ended December 31, 2022 (Q3FY23). It says that it was due to input cost pressures and a fall in aluminium prices. The net profit last year stood at Rs 3,675 crore.

Hindalco’s consolidated revenue for Q3 rose nearly six per cent YoY to Rs 53,151 crore. But total expenses jumped 15 per cent YoY in Q3, with power and fuel prices jumping nearly 54 per cent versus last year in the quarter under review.

This surge in power and fuel prices reflected in earnings before interest tax depreciation and amortisation (Ebitda) for Q3, which declined 48 per cent versus last year to Rs 3,930 crore. Ebitda was also impacted due to weak operational performance in the aluminium upstream business, the company said. This business, which includes bauxite and coal mining, is the second biggest contributor to Hindalco’s profit after Novelis, the US-based subsidiary, which accounts for over 40 per cent of Hindalco’s total profit.

Ebitda for the aluminium upstream business was Rs 1,591 crore in Q3, compared with Rs 3,309 crore for Q3 FY22, down 52 per cent YoY. The downstream aluminium business reported a 24 per cent YoY growth in operating profit to Rs 157 crore for the quarter under review.

“Though the India aluminium upstream business Ebitda came under pressure from the surge in input costs and lower realisations, this was partially offset by higher volumes,” Hindalco’s Managing Director Satish Pai said.

The copper business reported a 40 per cent YoY growth in quarterly operating profit to Rs 546 crore. While copper rod sales hit an all-time high in the quarter under review. “We are seeing core industries worldwide being buffeted by macro-economic and inflationary cost pressures,” Pai said. “But Q4 should be better than Q3 as the demand outlook will likely stabilise in China,” he said.

Benchmark London Metal Exchange aluminium has fallen off their record highs in early 2022, sliding over 15 per cent to levels of about $2,500-2,600 per tonne. This is due to factors such as the Russia-Ukraine conflict, recessionary fears in the US and Europe and China’s challenges around Covid-19.