Lower Material Costs and Higher Production Boost Hindalco’s Q1 2017 Numbers

Lower Material Costs and Higher Production Boost Hindalco’s Q1 2017 Numbers

Indian aluminium producer Hindalco Industries Ltd. turned in numbers for the first quarter of FY 2017 yesterday. The Aditya Birla Group subsidiary turned in substantially better bottom-line numbers in the just-ended quarter compared to last year’s Q1.

The firm increased aluminium production in the quarter by seventeen percent to 308 thousand metric tons. A drop in coal and crude oil prices led to a corresponding fall in production prices. Value-added products increased twelve percent, led by an eighty percent increase in wire rod production. The firm chalks this up to an increased demand by the domestic power grid.

Revenues for the quarter were off by eleven percent year-on-year. Although revenue from copper was down by 28%, aluminium revenues blunted the blow with its eight percent increase year-on-year. Despite the fact that LME prices for the metal were down by eleven percent in the quarter, the local market premium had a bigger impact, as it declined in some cases by up to fifty percent. Imports of aluminium, mainly from China, also took its toll on the firm’s bottom line.

Though prices were down, Hindalco offset the weaker market by an increase in aluminium volume output. In addition, the weak Indian currency and an overall drop in raw materials were a significant boon to the firm as well.

Alumina production for the quarter totaled 708 thousand metric tons, a ten-percent increase year-on-year. Aluminium production totaled 308 thousand metric tons, also up from the previous Q1, by seventeen percent. Hindalco says an upswing in production, coupled with greater efficiency, increased operations stability, and lower input costs boosted EBITDA by 64% year-on-year to US$135 million.

Overall profit before interest, tax, depreciation, and amortization (PBITDA) was US$202 million, which represents an increase of one third year-on-year. Profit before taxes in Q1 was US$61.7 million, a significant increase year-on-year from last Q1’s US$10.4 million. Net profit for the quarter was US$44 million, again stronger than last Q1’s net of US$9 million.