Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — FY2013 Earnings Presentation
40 slides from Hindalco Industries's earnings presentation, May 28, 2013
Slide 1: Investor Presentation Financial year 2013
INVESTOR PRESENTATION Financial year 2013 May 28, 2013
Slide 2: Structure of the Presentation
Structure of the Presentation Highlights Performance Review - Aluminium Performance Review - Copper Projects update Gearing for the Future 2
Slide 3: FY 2013: Highlights
FY 2013 : HIGHLIGHTS 3
Slide 4: FY13: Major stepping stone on our strategic path
FY13: Major stepping stone on our strategic path Key Greenfield projects, which shall redefine our competitive edge, taken to the last lap Indian business’ VAP strategy solidified with Hirakud FRP and Mouda Foils projects Robustness of conversion businesses vindicated yet again in a challengin
Slide 5: Global Economy: Recovery still elusive
Global Economy: Recovery still elusive 58.0 56.0 Global Manufacturing PMI CRB Commodity Index) 54.0 590 570 52.0 550 50.0 530 48.0 510 490 46.0 470 Apr-11 Apr-13 Apr-12 Jul-12 Oct-12 Jan-11 Jan-13 Jan-12 Jul-11 Oct-11 450 Equity markets have been enthusiastic recently, powered by unprecedented sup
Slide 6: FY13 Consolidated: Highlights
FY13 Consolidated : Highlights Aluminium segment: Margin compression in Indian business largely compensated for by Novelis’ steady performance Copper segment: Robust show by conversion business in India and Nifty mines; decline largely due to losses at MGO and due to Smelter shut down in Q1 Pr
Slide 7: FY13: Consolidated Results
FY13: Consolidated Results PBITDA maintained at last year’s level despite challenges across Businesses Higher interest burden led to a drop in PBT and PAT Change ` Cr FY13 FY12 (%) Net Sales 80,193 80,821 (0.8) PBITDA 8,849 8,967 (1.3) Interest 2,079 1,758 18.3 Depreciation 2,861 2,864 (0.1) PBT
Slide 8: FY13: Standalone Results
FY13: Standalone Results Change ` Cr FY13 FY12 (%) Net Sales 26,057 26,597 (2.0) EBITDA 2,204 3,105 (29.0) PBITDA 3,187 3,721 (14.3) PBT 2,047 2,737 (25.2) PAT 1,699 2,237 (24.0) EPS (`) 8.88 11.69 8
Slide 9: Standalone Q4: Sharp sequential improvement
Standalone Q4: Sharp sequential improvement.. Change ` Cr Q4 FY13 Q3 FY13 Q4 FY12 (%, sequential) Net Sales 6,994 6,872 1.8 7,647 EBITDA 643 582 10.5 865 Other 231 318 (27.4) 161 Income PBITDA 874 900 (2.9) 1,025 PBT 544 543 0.2 779 PAT 482 434 11.2 640 EPS (`) 2.52 2.26 3.34 Significant improvement
Slide 10: EBITDA Trend (Rs. Crore)
EBITDA TREND (Rs. Crore) Sequential Growth in Sales, EBITDA and EBITDA Margin 10
Slide 11: Performance Review: Aluminium
PERFORMANCE REVIEW: ALUMINIUM 11
Slide 12: LME at unsustainably depressed levels
LME at unsustainably depressed levels Aluminium LME ($/t) 2700 2600 2500 2400 Global inventory ~96 2300 days 2200 2100 Capacity operating at 2000 loss: 1900 1800 31% in China, 1700 18% outside China Closures of high-cost capacities essential to restore balance 12 The trend has started…..
Slide 13: FY13 Highlights: Aluminium
FY13 Highlights: Aluminium Aluminium (India): Compression of margins Margins fell due to adverse macro factors, but still best among the peers Operational improvements in H2 after one-time setbacks in H1 Strong progress on projects Novelis: Solid results despite unexpected headwinds Adj. EBI
Slide 14: Al (India) Highlights: FY13
Al (India) Highlights: FY13 Existing operations have stabilized after setbacks in H1 Sequential improvement in margins in both Q3 and Q4 VAP capabilities strengthened with commissioning of Hirakud FRP and Mouda Foils projects Downstream volumes grow despite lower metal availability Greenfi
Slide 15: Al: Steady improvement in Operational Performance
Al: Steady improvement in Operational Performance With stabilization of smelter operations in H2, volumes improved….. Metal Output (kt) VAP tonnage increased 139 142 from 245 kt in FY12 to 132 128 255 kt in FY13 VAP proportion up from 43% to 47% Hydrate/Alumina sale up 4% to 281 kt Q1 FY13 Q2
Slide 16: Three key factors affected profitability in FY13
Three key factors affected profitability in FY13 FY12 FY13 Weak LME $ /t 2,317 1,976 `/Kg 111.0 107.3 Costs of key inputs like coal, Input Cost caustic soda and furnace oil Pressures were higher in FY13 than FY12 by 10-30% H1 Smelter Nearly 30 kt volume lost and Disruptions efficiencies suffered ..
Slide 17: Al: Financial Performance
Al: Financial Performance Quarterly Trend FY13 Performance Net Sales (` Crore) Net Sales (` Cr) 2,062 2,105 2,215 2,396 FY12 9041 FY13 8779 Q1 Q2 Q3 Q4 FY13 FY13 FY13 FY13 EBIT (` Crore) 270 284 Up 39% EBIT (` Cr) 206 qoq 170 FY12 1822 FY13 930 Q1 Q2 Q3 Q4 17 FY13 FY13 FY13 FY13
Slide 18: Novelis: FY13 Actions on Strategy
Novelis: FY13 Actions on Strategy CONTINUE TO STRENGTHEN THE BUSINESS Divested 3 foil plants in Europe Closed Saguenay Plant in Canada Shut down Ouro Preto potline in Brazil Implemented ERP system in 2 North American Plants CAPTURE GROWTH IN OUR FRP MARKETS Major Rolling Expansions progres
Slide 19: Novelis Highlights: FY13
Novelis Highlights: FY13 Q4 had a strong comeback - Adj. EBITDA up 30% sequentially to $240 Mn Record Capex of $775 Mn in FY13 for strategically directed future growth projects Solid Liquidity of $760 Mn despite aggressive capex Shipments down 2% in FY13 due to divestment of three foil plant
Slide 20: Performance Review: Copper
PERFORMANCE REVIEW: COPPER 20
Slide 21: Cu: Key External Drivers
Cu: Key External Drivers FY13 vs. Impact FY12 TCRC Nearly flat LME ($/t) -7% Exch. Rate (`/$) +13% Acid Price Significantly lower DAP Subsidy lower 21
Slide 22: FY13 Highlights: Copper (India)
FY13 Highlights: Copper (India) Copper (India): Robust performance Financial performance maintained overcoming the weakness in co- product markets in H2 & loss of production in H1 22
Slide 23: Cu: Production Performance
Cu: Production Performance Cathode output declined from 330 kt in FY12 to 315 kt in FY13 (5%) due to plant health issues in Cu-III Cathode (kt) Output has improved sequentially in every quarter of FY13 84 85 CCR output maintained, improving 77 69 product-mix CCR proportion up from 44.5% in Q
Slide 24: Cu: Financial Performance
Cu: Financial Performance Quarterly Trend FY13 Performance Net Sales (` Crore) Net Sales (` Cr) 3,967 4,066 4,661 4,607 FY12 17575 FY13 17305 Q1 Q2 Q3 Q4 FY13 FY13 FY13 FY13 Up 15% qoq EBIT (` Crore) EBIT (` Cr) 259 209 225 FY12 802 76 FY13 768 Q1 Q2 Q3 Q4 24 FY13 FY13 FY13 FY13
Slide 25: Segmental – FY13
Segmental – FY 13 Aluminium Greenfield Copper SALES 34% 66% EBIT 55% 45% C.E 25% 59% 16%
Slide 26: Segmental – Q4 FY13
Segmental – Q4 FY 13 Aluminium Greenfield Copper SALES 34% 66% EBIT 52% 48% C.E 25% 59% 16%
Slide 27: Update on Strategic Projects
UPDATE ON STRATEGIC PROJECTS Our growth ambitions assuming shape & structure 27
Slide 28: Projects – Wave-I on ground
Projects – Wave-I on ground … 2009 We started implementing an ambitious $5.5 Bn Greenfield Capex programme to: Build best-in-the-class, ‘Last Man Standing’ assets Raise metal capacity to 2.3x (0.6 Mn ton to 1.3 Mn ton) Double alumina capacity (1.5 Mn ton to 3 Mn ton) 2013 Trial production star
Slide 29: Mahan: First Metal Out; Trial production started
Mahan: First Metal Out; Trial production started (Apr’13) Staff accommodation Mahan Complex First Metal Poured Anode Rodding 29
Slide 30: Utkal Alumina: Under Commissioning
Utkal Alumina: Under Commissioning Bauxite grinding mill Mud Washing: Flocculent Unit Bauxite Conveyor CPP: Unit 1 ready 30
Slide 31: Aditya Aluminium: Progressing well
Aditya Aluminium: Progressing well Power House Pot Room Cast House Furnace Around 11,000 people at site 220KV line completed and charged 31
Slide 32: Hirakud Brownfield Expansion
Hirakud Brownfield Expansion New 235 KA Pots Power Plant – New Unit Stage-wise commissioning started 32
Slide 33: Novelis: Solidifying Leadership Position
Novelis: Solidifying Leadership Position Germany United States Korea ~400kt ~200kt Mid CY13 Mid CY14 ~350kt Mid CY13 ~265kt Oct. 2012 775 Capex ($ Mn) China Brazil 516 ~120kt End CY14 ~220kt Dec. 2012 Commissioned ~190kt End CY13 FY12 FY13 Rolling Capacity Expansion Automotive Finishing Line(s) Recy
Slide 34: Novelis: Projects progressing well
Novelis: Projects progressing well Pinda: Commissioned Dec’12 Auto finishing line in the US Germany Recycling Project: project Korea Cold Mill team on first pillar (Mar’13) 34
Slide 35: Gearing for the Future
ADITYA BIRLA GEARING FOR THE FUTURE
Slide 36: Aluminium – Strong Growth Prospects
Aluminium – Strong Growth Prospects World Aluminium Consumption Projected (kt) Consumption Growth 50000 CAGR 5.0% CAGR 6.7% 40000 CAGR 2.7% 30000 61 mn t 20000 41 mn t 10000 0 2010 2016 _____________________ Source: Published reports Consumption growth multiple (1990-2010) vis-à-vis GDP growth Al Cu
Slide 37: Long-term Trends in Aluminum Demand
LONG-TERM TRENDS IN ALUMINUM DEMAND Long-term CAGR (CY12-17) ~4-5% ~25% ~6% Beverage Can Automotive Specialties Strong Long-Term Growth in Premium Products 37
Slide 38: Industry dynamics & Hindalco
Industry dynamics & Hindalco Growth strategy based on Resource challenges are likely access to proximate resources to continue into the long-term even more relevant than in the past Inventory overhang and its Pressure on margins for effects are transient; but may existing facilities will continue; c
Slide 39: Thank you
ADITYA BIRLA Thank you
Slide 40: Forward Looking & Cautionary Statement
Forward Looking & Cautionary Statement Certain statements in this report may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the