Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q1 FY08 Earnings Presentation
28 slides from Hindalco Industries's earnings presentation, Jul 31, 2007
Slide 1: Performance Review Q1 FY08
Hindalco Industries Limited Performance Review Q1 FY08 31st July 2007
Slide 2: Highlights & Backdrop
Highlights & Backdrop
Slide 3: Highlights
Highlights Novelis acquisition completed on 15th May. New Board taken charge Financing at Novelis and Hindalco completed. Hindalco to acquire 45% Alcan’s stake in Utkal MOC allotted Tubed coal block for Lathehar project to be shared with Tata Power in 60:40 ratio. With this captive coal mi
Slide 4: Backdrop : Q1 FY08
Backdrop : Q1 FY08 Adverse macro economic conditions affected the business, INR appreciated 9.1% against US$ from Rs. 45.77/$ during Q1 FY07 to Rs. 41.49/$ during Q1 FY08. Reached 9 year high of 40.28/US$ on 11th May’07. Alumina spot price down by 36% from US$550/Mt during Q1 FY07 to US$352/Mt d
Slide 5: Backdrop : Domestic Macro Trends - FY08
Backdrop : Domestic Macro Trends - FY08 Aluminium import duty Copper Duty Differential 40% 40% 30% 30% 20% 20% 10.6% 10% 7.7% 5.7% 10% 5.7% 4.5% 3.1% 0% 0% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Source : Company data Source : Company data Indian Rupee remains
Slide 6: Backdrop : Global Macro Trends
Backdrop : Global Macro Trends Even with higher LME, Aluminium price has fallen in Alumina prices down significantly compared to Q1 INR terms FY07 700 126000 LME INR (Left margin) 2900 LME USD (Right Margin) 124000 600 2800 122000 500 2700 120000 400 340 118000 2600 300 116000 200 2500 114000 100 24
Slide 7: Backdrop : Global Macro Trends
Backdrop : Global Macro Trends Copper prices remain at high levels with low Weakening Spot Tc/Rc inventory 1600000 8000 60 LME CSP US$ 51.3 1400000 7000 50 1200000 6000 40 1000000 5000 TcRc for Q1 30 800000 4000 600000 3000 20 400000 2000 10 5.6 200000 1000 Inventory 0 Aug-05 Aug-06 Apr-05 Jun-05 Oc
Slide 8: Adverse macro-economic factors were neutralised by……
Adverse macro-economic factors were neutralised by…… Timely progress of Brownfield expansion resulting in availability of more metal The Hirakud expansion (stage I) upto 100 Ktpa completed on time Successful Cu-III ramp-up resulting in anode production increase of 21 Kt during Q1 FY08 Contin
Slide 9: Q1 FY08 at a Glance
Q1 FY 08 at a Glance Aluminium production at 116169 T 8% Best ever Copper cathode Production at 79,234 T 23% Amongst the Best Strong Revenue growth: Rs.4,678 Crores 9% Amongst the Best Net Profit maintained at Q1FY07 level at Rs. 603 Crores despite adverse business environment. F 9
Slide 10: Financial Highlights – Q1FY08
Financial Highlights – Q1FY08 Q1 FY08 Change (Rs. Crs) (%) Net Sales & Operating 4,678 9% Revenue Pre-tax profits 810 0% Net Profit 603 0% EPS (Rs/$ Per Share) 21.8 -10% F 10
Slide 11: All round increase in production.
All round increase in production. Q1 FY07 Q1 FY08 (Mt) 299449 302430 Highest ever metal production in any quarter 116169 107156 57092 17034 52110 17433 10185 8638 6606 6525 Alumina Primary Metal Wire Rods FRP Extrusions Foils _______________________ Source: Company Data Consistently high capacity ut
Slide 12: Sales volume
Sales volume Significant improvement in Aluminium sales volume Aluminium With higher value added proportion (Mt) (Mt) 110000 120000 Primary Value added +8% 107209 100000 105000 80000 57502 +8% 53205 60000 +7% 100000 99592 40000 46387 49707 20000 95000 0 Q1 FY07 Q1 FY08 Q1 FY07 Q1 FY08 F 12
Slide 13: Copper - key levers of performance
Copper - key levers of performance……….. Cathode production up at 79 KT (23 % higher than Q1 FY 07) LME Backwardation has come down from US$108/t to 64 $/t in Q1 FY 08 (for 3M spread). Copper cathode sales was up at 78KT (19 % higher than Q1 FY 07) In Q1 FY 08 Domestic market share increased
Slide 14: Detailed Financials
Detailed Financials
Slide 15: Drivers of Performance : Q1 FY08
Drivers of Performance : Q1 FY08 Particulars Unit Q1 FY08A Q1 FY07A Al LME $/t 2,762 2,653 Re. / USD Rs. 41.49 45.77 Al. Basic Customs Duty % 5.0 7.5 Domestic Ingot Realisation Rs/t 121,355 124,312 Std Alumina Realisation $/t 369 596 Copper Tc/Rc c/lb 31.2 28.8 Cu LME $/t 7,507 7,083 Cu Duty Differe
Slide 16: Detailed Financial Results Q1 FY08
Detailed Financial Results Q1 FY08 Rs.Crs. Q1 FY08 A Q1 FY07 A % change Net Sales 4,677.9 4,273.7 9% Total Expenditure 3,793.6 3,340.4 14% Other Income 124.6 77.6 61% PBDIT 1,008.9 1,010.9 0% Depreciation 142.8 134.1 7% PBIT 866.1 876.8 -1% Interest & Finance Charges 56.2 63.4 -11% Profit Before Tax
Slide 17: ALUMINIUM
ALUMINIUM
Slide 18: Aluminium: Production Performance – Q1 FY08
Aluminium: Production Performance – Q1 FY08 Unit Q1 FY08A Q1 FY07A % Change Alumina MT 302,430 299,449 1.0% Metal MT 116,169 107,156 8.4% Wire Rods MT 17,433 17,034 2.3% Rolled Products MT 57,092 52,110 9.6% Extrusions MT 10,185 8,638 17.9% Foil MT 6,525 6,606 -1.2% Alloy Wheels Nos. 44,576 46,106 -
Slide 19: Aluminium: Sales Revenues - Q1 FY08
Aluminium: Sales Revenues - Q1 FY 08 Sales Revenue Unit Q1 FY08A Q1 FY07A % Change Alumina Rs.Crs. 713 183 -11% Primary Metal Rs.Crs. 393 368 7% Wire Rod Rs.Crs. 219 222 -1% Rolled Products Rs.Crs. 610 573 7% Extrusions Rs.Crs. 152 129 18% Foils Rs.Crs. 130 134 -3% Wheels Rs.Crs. 10 9 4% Others Rs.C
Slide 20: Aluminium: Sales Volumes – Q1 FY08
Aluminium: Sales Volumes – Q1 FY 08 Sales Tonnage Unit Q1 FY08A Q1 FY07A % Change Alumina MT 76,572 68,517 12% Primary Metal MT 32,390 29,752 9% Wire Rod MT 17,317 16,635 4% Rolled Products MT 42,151 38,662 9% Extrusions MT 9,582 8,116 18% Foils MT 5,769 6,427 -10% Wheels Nos 46,473 46,582 -0.2% F 2
Slide 21: COPPER
COPPER
Slide 22: Copper : Production Performance – Q1 FY08
Copper : Production Performance – Q1 FY08 Produc tion Unit Q1 FY 08 Q1 FY 07 % Change Copper Cathodes MT 79234 64670 22.5% CC Rods MT 34094 27305 24.9% DAP/NPK MT 36220 72502 -50.0% F 22
Slide 23: Copper: Sales Revenues - Q1 FY08
Copper: Sales Revenues - Q1 FY 08 Rs. Crs. Produc t Q1 FY 08 Q1 FY 07 % Change Copper Cathodes 1448.5 1335.3 8.48% CC Rods 1124.0 885.2 26.97% DAP/NPK 56.1 117.4 -52.25% Sulphuric Ac id 17.4 10.2 70.42% Gold 152.3 243.6 -37.50% Silver 17.3 17.1 0.82% Others 110.6 12.8 Total Sales 2926.2 2621.7 11.61
Slide 24: Copper : Sales Volumes
Copper : Sales Volumes Sales V olumes Unit Q1 FY 08 Q1 FY 07 % Change Copper Cathodes & Others MT 44688 38013 17.56% CC Rods MT 33729 27571 22.34% DAP/NPK MT 37656 73700 -48.91% Sulphuric Ac id MT 172653 106672 61.85% Gold Kg 1730 2712 -36.21% Silver Kg 9477 9065 4.54% F 24
Slide 25: Company Results
Company Results Segment Rs.Crs. Company Information Information Other Unallocable Al EBIT Cu EBIT Interest PBT Tax PAT Incom e expenses Q1 of FY07 712.5 97.8 -63.4 77.6 -11.0 813.5 -212.0 601.5 Q1 of FY08 642.3 112.3 -56.2 124.6 -13.1 809.9 -207.0 602.9 Change -70.2 14.5 7.2 47.0 -2.1 -3.6 5.0 1.4 F
Slide 26: Other Income – Q1 FY08
Other Income – Q1 FY08 Rs. Crs 125 Other Income Higher than Q1 FY07 due to 11 Higher Average Treasury (due to cash profits, rights and preferential issue and 78 net of Novelis investments) Rs.4932 Crs. vs. Rs.3455 Crs. in Q1 in last year. 28 113 Higher pre-tax treasury yield at 11.86% against 8.
Slide 27: Interest & Finance Charges – Q1 FY08
Interest & Finance Charges – Q1 FY08 Q1 FY07 Q1 FY08 Net interest and finance charges lower than 149 Rs. Crs last year due to Increase in working capital requirement of Birla Copper financed out of own funds 85 and decrease in interest rate for foreign 63 currency borrowing due to weak dollar. 56
Slide 28: Taxes – Q1 FY08A vs. Q1 FY07A
Taxes – Q1 FY08A vs. Q1 FY07A Rs. Crs Provision for Taxes against QI FY07 207 212 marginally lower mainly due to :- 17.5 40.8 Decrease in effective tax rate due to proportionately higher exempt income. 194.5 166.2 Current tax reduced and Deferred tax increased due to increased depreciation on ma