Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q2 FY10 Earnings Presentation
30 slides from Hindalco Industries's earnings presentation, Oct 31, 2009
Slide 1: Hindalco Industries Limited Q2 FY10 Investor Presentation
Hindalco Industries Limited Q2 FY10 Investor Presentation 31st October’09 1
Slide 2: Highlights, Backdrop, Outlook, Project Highlights
Highlights Backdrop Business Conditions & Performance Review Industry & Business Outlook Project Highlights 2
Slide 3: Highlights: Best Ever Q2 & H1 Production Performance
Highlights: Best Ever Q2 & H1 Production Performance Q2 FY10 H1 FY 10 Highest ever Production Aluminium 139,894 7% 275,333 8% 311,706 623,623 4% Alumina 5% C Copper C Cathode th d 89 692 89,692 16% 169 474 169,474 23% Copper Anode 93,297 15% 169,629 19% Aluminium: Highest ever quarterly producti
Slide 4: Economy: Nascent Signs of recovery
Economy: Nascent Signs of recovery GDP growth- Major economies 7% India Growth IIP 6% 5.80% 5% 4.80% 10.0% USA UK China 4% 9% 8.0% 7.90% 3% 6.0% 6.80% 6.10% 2% 1% 4.0% 0% YTD Aug FY09 YTD Aug FY10 2.0% 9% Sector Growth 8.40% YTD Aug FY09 0.0% 8% 2008 Q3 2008 Q4 2009 Q1 2009 Q2 YTD Aug FY10 -0.60% -0
Slide 5: Commodity price trend: Only partial revival, yet prices much below last year
Commodity price trend: Only partial revival, yet prices much below the last year levels Indexed: Base=100 Aluminium Copper Zi Zinc L d Lead 110 Nickel Crude 80 50 20 8 9 09 8 9 08 8 09 8 9 '0 '0 '0 '0 c'0 '0 '0 b' g' g' ne ne ct ct ril ril Fe Au De Au Ap Ap O O Ju Ju • Though the commodity prices ha
Slide 6: Key Industry Drivers
Key Industry Drivers Q2 FY10 vs Q2 FY09 Driver I Impactt Aluminium LME C Copper LME Exchange Rate(Rs/$) Copper Spot Tc/Rc C Copper B By-Products P d t Realisation R li ti Most Macro economic factors unfavourable
Slide 7: The adverse macro economic factors adversely affected the businesses
The adverse macro economic factors adversely affected the businesses. Aluminium Ingot realisation Copper Fall in DAP Subsidy & SA realisation Indexed: Base=100 Indexed: Base=100 120 100 120 100 DAP Subsidy 100 100 100 Sulphuric acid 80 72 80 60 60 40 40 29 20 20 5 0 0 Q2 FY09 Q2 FY10 Q2 FY09 Q2 FY10
Slide 8: Business Conditions-Aluminium
Business Conditions-Aluminium Aluminium consumption slowly …Inventories still a concern improving but still well below Previous year levels 120 109.6 104.2 7 Aluminium Stock (Mn T) 3500 100 96 92.9 90.9 LME CSP US$/Mt 6 3000 83.4 2940 ay 5 2500 Con sumption Kt/da 80 4 1812 2000 60 3 1500 40 2 1000 1
Slide 9: Aluminium Business Performance
Aluminium Business Performance 9
Slide 10: All round improvement in Production
All round improvement in Production (Mt) 317500 150,000 70,000 Q2 FY09 310000 Q2 FY10 311706 296408 131,314 140,000 +5% 60,000 51,819 302500 39,894 +7% 787 295000 +12% 57,7 13 130,000 50,000 287500 280000 120,000 40,000 272500 265000 110,000 30,000 257500 250000 100,000 20,000 Alumina Primary Metal
Slide 11: Improved downstream Sales volumes
Improved downstream Sales volumes Downstream Primary Value added Primary 150 140 130 12% 120 110 53.8 100 48.2 90 43% 80 70 23 4 23.4 16.4 Kt 9% 60 50 40 30 55.1 60.2 20 10 0 Q2 FY 09 Q2 FY 10 11
Slide 12: Business Conditions: Copper
Business Conditions: Copper Precipitous fall in spot Copper TCRC’s Sulphuric Acid realisations continue to remain depressed DAP subsidy has fallen sharply from its peak by 79%. Improved availability of Scrap led to revival of unorganised sector rod production in North-Significant impact on duty
Slide 13: Copper Business Performance
C Copper B Business i P Performance f 13
Slide 14: Significantly lower cost of production
Significantly lower cost of production…… Total Cash cost of Production without by-product credits (Indexed) 105 100 85 67 65 45 25 5 Q2, 09 Q2, 10 -15 33% reduction ~ Single digit Cash Smelting cost achieved in Q2 FY10.
Slide 15: Domestic Market share improved
Domestic Market share improved Market share enhanced by 1 percentage point. Significant improvement in Market and product mix Lucrative Duty paid sales up by 18 % Value added CCR sales up by 10% in Dom market Improvement in export premiums . 13% growth in Overall Sales Volume
Slide 16: In a nutshell: Outstanding Operational performance by both businesses
In a nutshell : Outstanding Operational performance by both Aluminium & Copper businesses. We produced more….. Highest g ever Al & Cu p production We Sold More….. 15% higher Aluminium sales 13% higher copper sales We improved the product mix and sold at the most lucrative markets. markets Howe
Slide 17: Hindalco Financials – YOY (Q2)
Hindalco Financials –YOY (Q2) Rs Crores Q2 FY09 Q2 FY10 Change (%) Net Sales 5683 4917 -13% PBDIT 1170 666 -43% PBT 926 434 -53% PAT 720 344 -52% 52% 17
Slide 18: Aluminium: Y-O-Y Performance at a glance
Aluminium: Y-O-Y Performance at a glance Change Rs Crores Q2 FY09 Q2 FY10 (%) Net Sales & Operating 2121 1650 -22% Revenue EBIT 715 259 -64% 64% Q2 FY 10 numbers Post AS 30 Adoption 18
Slide 19: Copper: Y-O-Y Performance at a glance
Copper: Y-O-Y Performance at a glance Change Rs Crores Q2 FY09 Q2 FY10 (%) Net Sales & 3565 3269 -8% Operating Revenue EBIT 138 217 57% Q2 FY 10 numbers Post AS 30 Adoption 19
Slide 20: Outlook - Aluminium
Outlook - Aluminium / y Y Le: Stik mM S bi) |! ul ili, / HM / yf = u i} Nj= \ ; et | oy a
Slide 21: Aluminium prices expected to remain range-bound in the short term
Aluminium prices expected to remain range-bound range bound in the Short term 2300 Commerz Bank AG National Australia Bank Ltd Duetshe Bank Westpak Banking Corpn 2200 Barclays Plc CRU 2100 2000 1900 1800 1700 1600 1500 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 M
Slide 22: Outlook - Copper
Outlook - Copper
Slide 23: Copper Market Outlook
Copper Market Outlook LME likely to remain strong on optimism and risk Global Refining appetite Capacity Utilization (%) 83.8 But Refined Cu market surplus may cap further 83.0 gains 81.8 80.8 Cathode premia lower than last year, but holding ground at current level 77.0 Project delays caused
Slide 24: Projects: Aluminium Capacity Growth
Projects :Aluminium Capacity Growth 1,800 Jharkhand- Q1 FY13 Jharkhand 1,600 1609 1638 1,400 1 200 1,200 Mahan-July Mahan July FY12 1295 Aditya-Oct FY12 1,000 Hirakud (80 addl pots) 800 O t FY12 Oct 600 718 517 559 400 535 200 0 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 24
Slide 25: To Sum Up… Challenging Environment, Our focus Areas
To Sum Up… Challenging Environment Our focus Areas ► Depressed Prices ► Improve Asset productivity ► Increasing g input p costs ► Contain Input p costs H1 FY 10 ► Low Tc/Rc ► Maintain Growth Momentum In the face of severe challenges,the company is unwavering in its commitment to deliver shareholder
Slide 26: Thank You
Thank You 26
Slide 27: Hindalco announces Q2 FY 2009-2010 results
Hindalco announces Q2 FY 2009-2010 results Revenues Rs. 4917 crores PBITDA Rs. 666 crores PAT Rs.344 crores Sharp fall in Realisation and by-product credit impacts results adversely Financial highlights Quarter Quarter Half year Half year (In Rs. crores) ended ended ended ended 30 Sep 2009* 30 Sep 2
Slide 28: Economic factors led to 64 per cent drop in aluminium EBIT
economic factors led to 64 per cent drop in the profit before interest and tax for aluminium business from Rs. 715 crores in Q2FY09. In the copper business, revenues declined by 8% from Rs. 3,565 crores in Q2FY09 to Rs. 3,269 mainly on account of lower copper LME. Copper being a custom smelting oper
Slide 29: Brownfield expansion projects
Brownfield expansion projects Hirakud The smelter expansion from 143 ktpa to 155 ktpa was completed on time. Work on the smelter expansion from 155 ktpa to 213 ktpa is now underway, part of this will be completed by July 2010 and the rest will be commissioned in FY 12. Project is underway for transf
Slide 30: Copper outlook and company outlook
Copper Copper prices have sustained their strength, aided by a brighter outlook on global economy and improved risk sentiment. However, rising exchange stocks and muted Chinese imports may cap further uptrend in prices. The Indian copper market benefited from the robust trend in the electrical segme