Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — FY2002 Earnings Presentation
38 slides from Hindalco Industries's earnings presentation, May 3, 2002
Slide 1: Performance Review FY 2002
Performance Review FY 2002 Mumbai 3rd May 2002
Slide 2: Presentation Structure
Q4 FY02 Results 9 FY 02 Results Aluminium Industry Outlook Growth Initiatives and Future Direction
Slide 3: FY 2002 - Highlights
FY 2002 - Highlights Sales grew 2.5 % to Rs. 2,331 Cr. Exports down by 10.7 % to Rs. 342 Cr. Operating Profits decreased by 5.6 % to Rs. 994 Cr. Operating Margins down by 3.6% to 42.6 % Profit before Deferred Tax up by 10.3% to Rs.748 Cr. Net Profit up by 1.2% to Rs.686 Cr. EPS at Rs.9
Slide 4: FY 2002 Results
` FY 2002 Results (Rs. in Crores) Particulars FY2002 FY2001 Change (%) Net Sales 2,331 2,275 2.5 Total Expenditure 1,337 1,223 9.4 Operating Profit 994 1,053 (5.6) Other Income 211 131 60.4 Interest Payment * 46 62 (26.3) Depreciation 154 142 8.4 Profit Before Tax 1,005 980 2.5 Provision for Current
Slide 5: Results reflect a Challenging Environment
Results reflect …….... A Challenging Environment Weakness in the Economy and slowing Industrial growth Lower LME prices and Reduction in Domestic Prices Poor quality and higher cost of coal Steep increase in prices of main inputs namely CP Coke, Caustic Soda etc. and Hindalco’s Response by w
Slide 6: Ratios and Statistics
Ratios and Statistics Particulars FY 1999 FY 2000 FY 2001 FY 2002 Operating Margin (%) 44.0 46.3 46.3 42.6 Gross Margin (%) 47.4 50.2 49.3 49.7 Net Margin (%) 32.1 30.1 29.8 29.4 ROACE (%) 21.4 22.7 22.0 19.0 ROAE (%) 18.9 17.4 16.6 15.9 Debts/Equity Ratio 0.20 0.14 0.16 0.19 (Times) DPS (Rs.) 6.5 8
Slide 7: Production: Performance and Target
Production : Performance and Target (In MT) Alumina Metal 476,700 494,724 523,500 261,338 285,000 251,492 5.8% 3.9% 9.1% 3.8% FY 01 FY 02 FY 03 E FY 01 FY 02 FY 03 E 7
Slide 8: Production: Performance and Target
Production : Performance and Target (In MT) Extrusions Wire Rod 43,946 52,203 52,000 18,602 16,250 18,000 18.8% (12.6)% 10.8% FY 01 FY 02 FY 03 E FY 01 FY 02 FY 03 E 8
Slide 9: Production: Performance and Target
Production : Performance and Target (In MT) Foils Rolled Products 62,800 70,113 76,000 12,756 17,209 19,200 11.6% 8.4% 34.9% 11.6% FY 01 FY 02 FY 03 E FY 01 FY 02 FY 03 E 9
Slide 10: Power: Availability and Target
Power : Availability and Target (In MU) Renusagar Co-generation 3,977 4,053 4,388 237 242 273 1.9% 8.3% 2.1% 12.8% FY 01 FY 02 FY 03 E FY 01 FY 02 FY 03 E 10
Slide 11: Presentation Structure
Presentation Structure 9 Q4 FY02 Results FY 02 Results Aluminium Industry Outlook Growth Initiatives and Future Direction
Slide 12: Q4 FY 2002: Results at a glance
Q4 FY 2002 : Results at a glance Sales Rs. 648 Cr. 8.3% Operating Profit Rs.246 Cr. 5.4% Operating Margins 38.0% 5.5% Other Income Rs.80 Cr. 180.1% Profit before deferred tax Rs.214 Cr. 36.6% Net Profit Rs.192 Cr. 26.5% EPS Rs. 25.8 26.5% 12
Slide 13: Q4 FY 2002 Results
Q4 FY 2002 Results (Rs. in Crores) Particulars Q4 FY2002 Q4 FY2001 Change (%) Net Sales 647.6 598.3 8.3 Total Expenditure 401.4 337.9 18.8 Operating Profit 246.2 260.3 (5.4) Other Income 80.2 28.6 180.1 Interest Payment * 11.1 12.6 (11.8) Depreciation 40.6 36.0 12.7 Profit before Tax 274.7 240.3 14.
Slide 14: Q4 FY 2002: Production Performance
Q4 FY 2002: Production Performance Production Unit Q4 FY 2002 Q4 FY 2001 % Change Alumina MT 130,780 130,781 - Aluminium Metal MT 70,529 63,667 10.8 Wire Rod MT 13,766 12,551 9.7 Rolled Products MT 17,916 15,328 16.9 Extruded Products MT 4,002 4,291 (6.7) Aluminium Foils MT 4,760 3,510 35.6 Alloy Wh
Slide 15: Turnover
Turnover % Change Volumes Realisation Net Sales (Rs. Crore) Domestic 3.2 (1.7) Exports 56.1 (7.6) 8.3% Total 12.1 (3.4) 648 598 Quantity Q4 FY Q4 FY MT 2002 2001 Domestic 57,314 55,539 Exports 17,469 11,190 Total 74,783 66,729 Q4 FY 01 Q4 FY 02 15
Slide 16: Higher Share of Value Added Products
Higher Share of Value Added Products Volume (MT) Sales (Rs. Crore) 19,907 20,810 208.9 223.6 4.5% 7.0% 3,462 4,662 46.1 61.8 Foil 4,638 4,265 46.8 42.0 Extrusion 11,807 11,883 Rolled 116.0 119.8 Q4 FY 01 Q4 FY 02 Q4 FY 01 Q4 FY 02 Better product mix contributing to Revenue Growth 16
Slide 17: Product Wise Sales
Product Wise Sales (Rs. in Crores) Particulars Q4 FY 2002 Q4 FY 2001 % Change Rs. Crore Ingot 270.8 251.0 7.9 Rolled 119.8 116.0 3.3 Rods 120.5 105.4 14.3 Foils 61.8 46.1 34.2 Extrusion 42.0 46.8 (10.4) Billets 16.2 17.3 (6.4) Wheels 0.85 0.93 (8.7) Others 15.7 14.7 6.9 Total 647.6 598.3 8.3 17
Slide 18: Realisation reflects Impact of Price Reduction
Realisation reflects Impact of Price Reduction Average Realisation ('000 Rs./MT) 133 133 101 98 98 101 81 86 81 75 Ingot W.Rods Extrusion Rolled Foil Q4 FY01 Q4 FY02 18
Slide 19: Operating Expenditure
Operating Expenditure Operating Expenses increased by 18.8% • Increase in Sales volume by 12.1% Operating Expenditure (Rs. Crore) • Higher Input prices • Higher Power cost due to 18.8% 401 338 ¾Poor coal quality ¾Increase in coal prices • Higher maintenance expenses 19 Q4 FY 01 Q4 FY 02
Slide 20: Operating Profits
Operating Profits Operating Profits down by 5.4% Operating Profit (Rs. Crore) 5.4% Operating Margins at 38.0%, 260 246 Fall contained by • Higher Sales Volume • Higher Domestic Sales • Better Product Mix and • Operating efficiencies Q4 FY 01 Q4 FY 02 Operating Margin 43.5 % 38.0 % 20
Slide 21: Other Income & Interest Payment
Other Income & Interest Payment Higher other income due to Other Income & Interest Payment • Higher dividend income (Rs. Cr.) 180% • Debt Schemes of mutual 80 funds paid good returns • Liabilities no longer required written back Rs. 3.8 Cr. 29 11.8% • More surplus funds 13 11 Interest of Rs. 12.
Slide 22: Taxation
Taxation Effective tax rate reduced from Tax (Rs. Cr.) 34.7% to 22.0% : • Decrease in tax rate from 84 28% 39.55% to 35.7% • Higher WDV Depreciation 61 • Set off of carried forward capital losses 349% 22 • Higher tax free Income through dividends 5 Higher IT depreciation and increase in marginal
Slide 23: Presentation Structure
Q4 FY02 Results FY 02 Results 9 Aluminium Industry Outlook Growth Initiatives and Future Direction
Slide 24: Global Scenario
Global Scenario Global consumption fell 4.1% in Calendar 2001 ¾ US consumption down 14.0%, Asia falls 6.7%, Japan down 9.0% ¾ Strong China, CIS and Eastern Europe could not reverse weak trends Falling consumption overruled 2.2 million tonnes of production cutbacks Prices saw a 30 month low of
Slide 25: Global Growth Pattern
Global Growth Pattern ( in %) Aluminium Consumption growth Region CY 2001 CY 2000 CY 1999 North America -14.0 -0.50 +7.1 Asia -6.7 13.9 +14.8 Japan -9.0 5.8 +2.3 China 10.2 15.4 +13.0 Western Europe -0.5 4.0 +3.4 World -4.1 6.1 +5.9 Aluminium Production Growth World +0.1 +3.1 +4.3 Source: CRU Alumin
Slide 26: LME Cash Prices
LME Cash Prices Yearly Averages 1998-99 1,291 1999-00 1,473 2000-01 1,533 1800 1681 2001-02 1,395 1700 31st Mar-02 1,405 1600 29th Apr-02 1,385 1500 USD/Ton 1400 1300 1385 1200 1279 1243 1100 1000 Jul-99 Jul-00 Jul-01 Oct-99 Oct-00 Oct-01 Apr-99 Apr-00 Apr-01 Apr-02 Jan-00 Jan-01 Jan-02 26
Slide 27: Domestic Scenario & Outlook
Domestic Scenario & Outlook Manufacturing growth slowed to 2.7% in FY 2002 vis-à-vis 5.7% last year The adverse impact of the slowdown on Aluminium consumption The Electrical & Packaging Sectors exhibited positive trends Q4 FY 2002 saw initial revival trends in the Auto Segment Outlook Gov
Slide 28: The Scenario for Prices
The Scenario for Prices International Market: The fundamentals are altering Consumption and prices will move in tandem with the progressive improvement in fundamentals Domestic Market: Metal output is set to grow with Balco normalising, Nalco’s expected commissioning of expanded facilities in
Slide 29: Comparison of Landed Costs
Comparison of Landed Costs Rs/MT Domestic Price Landed Cost Imported Landed Cost 110,000 100,000 90,000 80,000 70,000 60,000 50,000 Jul-01 Oct-01 Apr-01 Mar-01 Jan-02 Mar-02 Jun-01 Feb-02 Sep-01 Dec-01 May-01 Aug-01 Nov-01 Gap between Landed Costs is low Further reduction in International Prices or
Slide 30: Metal Prices – Impact of LME and Duty
Metal Prices – Impact of LME and Duty 1 USD = Rs 48.80 LME Prices ($/T) 1,300 1,350 1,400 1,450 Premium (USD/Ton) 60 60 60 60 Clearing and other Charges (%) 2% 2% 2% 2% Custom Duty % (including SAD and 20.3% 20.3% 20.3% 20.3% net of CENVAT) Landed Cost of Imported Metal 81,327 84,317 87,307 90,297 L
Slide 31: Presentation Structure
Q4 FY02 Results FY 02 Results Aluminium Industry Outlook 9 Growth Initiatives and Future Direction
Slide 32: Brownfield Expansion
Brownfield Expansion Potline 9 commissioned ¾ Additional production of 10,000 MT achieved in FY02 Sweetening Process ¾ Good progress in Alumina Plant - Sweetening process in Alumina plant has been commissioned and stabilised Procurement activities initiated for additional 37 MW Co-gen. facilit
Slide 33: Buy – Back Update
Buy – Back Update Date of Approval 30th January 2002 Maximum Price for buy-back Rs.825.0 Investment Limit Rs. 428.2 Crore or 10% of paid- up equity Time period 1 year from date of approval Status Period Shares Total Amount Average % Bought Rate Rs. In Lacs Bought Upto 31st 5,807 42 725 0.01% March U
Slide 34: Project Rocket-2K - Profit Improvement Exercise
Project “Rocket –2K” - Profit Improvement Exercise Target benefits - Rs. 40-50 Crores to be achieved gradually in two years • YTD benefits achieved Rs. 22.1 Crores • Reverse Auction for outward transportation completed. ROCKET 2K Annualised Savings of Rs. 6 crore to accrue from May 02 onwards. • S
Slide 35: Project Everest - Extended ERP Implementation
Project “Everest”- Extended ERP Implementation A business improvement initiative aiming : • Cycle time improvement • Increased Manpower productivity • Customer solutions partner • Optimise resource utilisation PROJECT Training on Oracle Application started EVEREST Implementation Partner being
Slide 36: Dimensions of Future Growth
Dimensions of Future Growth Timely Completion of Brown Field Expansion and Production optimisation • Metal production: 342,000 MTPA to 3,60,000 MTPA • Alumina : 660,000 MTPA to 700,000 MTPA Optimisation of power resources and further increase in metal production by increasing the pot amperage
Slide 37: Thank You
Striving to create superior value for stakeholders THANK YOU
Slide 38: FY2002 Sales by Product
FY2002 Sales Quantity (MT) Value (Rs. Crore) Realisation (Rs./Ton) Product FY2002 FY2001 % Change FY2002 FY2001 % Change FY2002 FY2001 % Change Total Ingots 102,890 107,826 -4.6% 807.6 873.5 -7.5% 78,612 81,076 -3.0% Total Billets 7,797 11,613 -32.9% 60.6 93.5 -35.2% 77,676 80,499 -3.5% Total Rods 5