Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — H1 FY2007 Earnings Presentation
55 slides from Hindalco Industries's earnings presentation, Oct 18, 2006
Slide 1: Performance Review First Half 2006-07
Hindalco Industries Limited Performance Review First Half 2006-07 Presentation for Investors’ Meet 18TH October 2006
Slide 2: H1 at a Glance
H1 at a Glance Best Ever H1 Rs. Crores 12,000 10,000 8,908 YoY 8,000 6,531 Outstanding Outstanding 6,000 Revenues Revenues growth growth 4,000 2,000 83% 0 H1'03 H1'04 H1'05 H1'06 H1'07 Rs. Crores 3,000 2,500 2,108 2,000 1,630 EBIDTA EBIDTA at at aa Record Record 1,500 High High 1,000 500 73% 0 H1'
Slide 3: Key Performance Levers
Key Performance Levers Buoyant Macroeconomic Environment Stronger Metal Prices Sweating of Assets Enhanced Utilisation of Plants Improved product mix & Higher Market Share Focus on Increasing Share of Value Added Products Tight rein on efficiencies To Battle input price inflation 3
Slide 4: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 5: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 6: Backdrop: H1 FY07
Backdrop : H1 FY07 Average Aluminium spot prices on LME increased 42% YoY from $1,810/T to $2,565/T. Copper spot prices averaged $7,466/T vis-à-vis $3,579/T in H1 FY06, rising 109% YoY. However LME is a pass through for the Copper business. Indian Rupee depreciated 5.3% YoY from Rs. 43.64/$ to
Slide 7: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 8: Aluminium: Hirakud Smelter & Power
Aluminium: Hirakud Smelter & Power Expansion of Aluminium capacity from 65KTPA to 143KTPA and power capacity from 167.5 MW to 367.5 MW. Commissioning of Phase I (65KTPA to 100 KTPA) started before time 10 pots energized on 28th Sep; Ramp up is underway 150 pots to be commissioned by year end
Slide 9: Alumina: Utkal
Alumina: Utkal Greenfield Alumina project with refining capacity of 1,500 KTPA. Technology supply agreement signed with Alcan in July. Project kicked off on 28th July 2006. Commissioning in 35 months from the kick off date Land acquisition completed Detailed Engineering commenced – to be c
Slide 10: Aditya Alumina & Aluminium
Aditya Alumina & Aluminium Integrated greenfield project in Orissa with 1,500 KTPA refinery, 325 KTPA smelter and 750 MW power plant. Land acquisition is in progress, to be completed by June’07 Completed acquisition of 7% of required land for the Smelter. To acquire another 16% in October; A
Slide 11: Aluminium: Bargawan
Aluminium: Bargawan 325 KTPA Aluminium Smelter, 750 MW Captive Power Plant supported by 3.5 million TPA Captive Coal Mine. MOU signed with the State Govt. in May’06. Investment – Rs.7,700 Crores Proposed Location: Bargawan, Sidhi District, Madhya Pradesh Approval obtained for SEZ status.
Slide 12: Aluminium: Latehar
Aluminium: Latehar 325 KTPA Aluminium Smelter, 750 MW (4x150 MW + 1x150MW stand by) Captive Power Plant supported by 5 million TPA Captive Coal Mine in Jharkhand. Investment – Rs.7,800 Crores MOU signed with the Government of Jharkhand in March 2005. Allotment of coal block awaited as per th
Slide 13: Alumina: Muri
Alumina: Muri Brownfield expansion of Alumina Refining capacity from 110 KTPA to 450 KTPA. Civil & Structural work substantially complete, equipment erection in advanced stage. 100% of spending committed. Commencement of commissioning expected by first quarter of next fiscal. Calcination Bld
Slide 14: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 15: Financial Highlights – Q2 & H1 FY07
Financial Highlights – Q2 & H1 FY07 Q2 FY07 Change H1 FY07 Change (Rs. Crores) (%) (Rs. Crores) (%) Net Sales & Operating Revenue 4,634 74% 8,908 83% PBDIT 1,097 89% 2,108 73% Pre-tax profits 838 110% 1,651 89% Net Profit 598 90% 1,199 73% EPS (Rs. Per Share) 6.06 91% 12.17 73% 15
Slide 16: Aluminium
Aluminium
Slide 17: Alumina
Alumina Alumina Production: Plants at full utilization Alumina Mix: Higher Specialty Alumina Sales KT H1 FY06 KT 101.0% 101.7% 600 586 590 500 400 119 61 300 200 100 0 H1 FY06 H1 FY07 Standard Specialty Specialty Alumina Production (KT) H1 FY07 80 81 60 +26% 64 72 40 84 20 0 H1 FY06 H1 FY07 17
Slide 18: Alumina: Benefiting from higher realisation
Alumina: Benefiting from higher realisation Hindalco Alumina Realisations and Market Mix $/T 100% 600 HIL Special 80% Export Alumina 500 60% CRU Alumina Spot Price FOB Aus 400 HIL Standard 40% Alumina 300 20% Domestic 200 0% Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Highe
Slide 19: Aluminium Production
Aluminium Production Aluminium Production (KT) 250 Wheels (Nos.) 100,064 H1 FY06 H1 FY07 216.5 +16% 200 213.4 85,979 150 H1 FY06 H1 FY07A 104.8 94.4 Power (Mn KWh.) 100 4,153 3,871 +7% 50 33.6 34.3 14.9 18.4 13.2 13.3 0 Primary Metal Wire Rods FRP Extrusions Foils H1 FY06 H1 FY07A Consistently high
Slide 20: Metal Revenue Growth
Metal Revenue Growth H1 Sales (Rs. Crores) Product Mix (KT): H1 FY07 3,506 Foils 13.1 Primary Metal Extrusions 2,753 +27% 18.3 62.2 80.7 VAP 34.2 H1 FY06 H1 FY07 Flat Rolled Share:54% Products Wire Rods Domestic Al Prices vs. LME (Indexed) Product Mix (Rs. Crores): H1 FY07 Foils Domestic Ingot Price
Slide 21: Trends in Costs
Trends in Costs Items Carbon Raw Materials Energy Cost: Coal (Rs./Mn BTUs) Rs./T 35,000 Unilateral reduction in linkage by Coal India H1 FY06 +122% 100 Ltd. 95 Purchased Coal 30,000 90 H1 FY07 85 80 25,000 75 70 Q1 FY05 Q2 FY05 Q3 FY05 Q4 FY05 Q1 FY06 Q2 FY06 Q3 FY06 Q4 FY06 Q1 FY07 Q2 FY07 20,000 +
Slide 22: Margins
Margins EBITDA Margins 50% 45% 45% 44% 40% 39% 38% 38% 37% 35% 35% 30% H1 FY04 H2 FY04 H1 FY05 H2 FY05 H1 FY06 H2 FY06 H1 FY07 EBITDA = Segment EBIT + Depreciation, excludes unallocated other income 22
Slide 23: Copper
Copper
Slide 24: H1 Highlights: Bad News First
H1 Highlights Bad News First Higher Oil Prices Crude prices increased 21% YoY to $70.7/bbl. Resulting in high energy cost: Propane, Naphtha, F. Oil Higher Copper Prices on LME High Working Capital requirement Rise in carrying cost of raw material inventories 24
Slide 25: Higher Oil = Higher Energy
Higher Oil = Higher Energy $/bbl WTI Nymex Crude Rs. Rising Energy Cost 35,000 90 80 30,000 H1 FY06 +13% +26% H1 FY07 70 25,000 60 20,000 50 +31% 40 15,000 30 10,000 20 5,000 10 0 - F. Oil (Rs./KL) Propane Naphtha Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 (Rs./T) (Rs./T) Source: Reuters Total Impact
Slide 26: H1 Highlights: Good News
H1 Highlights Good News Ramp-up progressing satisfactorily Copper EBIT Rs. Crs 250 221.1 136.0 KT 200 143.6 150 Cu Cathodes 37.1% 110.2 Output YoY 100 35.6 99.2 KT 50 0 (16.3) -50 H1 FY05 H2 FY05 H1 FY06 H2 FY06 H1 FY07 Domestic market share regained Focus on improving capital efficiency 26
Slide 27: Improving Domestic Market Share
Improving Domestic Market Share… Copper Metal Market Share H1 FY06 H1 FY07 16% 15% 44% 48% 37% 40% Hindalco Sterlite Hind Copper Source: Hindalco 27
Slide 28: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 29: Aluminium
Aluminium
Slide 30: Business Outlook
Business Outlook Chinese Alumina supply have depressed prices Continued high subsidy in China encouraging Increased semi- fabricated products exports affecting premiums in East & S. East Asia LME prices expected to come under pressure going forward Hindalco to focus on Shortening project l
Slide 31: Domestic Demand Drivers
Domestic Demand Drivers Transport Sector Growth: H1 Projected Transport Sector Growth ‘000 Vehicles Mn Mn Two-Wheelers YoY Growth Vehicles Vehicles 700 30% 12 600 CAGR 15% 2.8 20% 500 10 10% 2.4 400 300 0% 8 2.0 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Two Wheelers CAGR 12.3% (Left Scale) 1.6 6 ‘00
Slide 32: Domestic Demand Drivers
Domestic Demand Drivers Power Generation Capacity ‘000 National Grid Transmission Lines GW Circuit Km 200 400 350 300 260 150 172 100 200 100 57 50 3 0 0 FY03 FY04 FY05 FY06 FY12 1950 1970 1990 Today 2012 Source: Morgan Stanley Source: Ministry of Power $ bn Projected Infrastructure Spending 50 Do
Slide 33: Global Demand/Supply
Global Demand/ Supply MnT Regional Primary Metal balance 5.0 2006 2010 2.5 0.2 0.0 (0.2) (2.5) (5.0) (4.9) (5.7) (7.5) Latin America Asia* China Australia Africa N. America World W. Europe E. Europe Middle East CIS * Asia excluding China and Middle East ____________________ Source: CRU Quarterly Jul
Slide 34: Developments in Global Industry
Developments in Global Industry Top 10 Aluminium Makers: 2005 Top 10 Steel Producers: 2005 MnTPA MnTPA 120 5.0 100 4.0 Glencore 80 Tata?? 3.0 ThyssenKrupp 60 2.0 Sual 40 1.0 20 0.0 0 Alcoa Alcan Alba Rusal Dubal BHP Sual Hydro Chalco RioTinto CVG Nippon Corus Baosteel Arcelor Nucor US Steel Mittal R
Slide 35: Copper Business Outlook
Copper Business Outlook
Slide 36: Copper Concentrates Market
Copper Concentrates Market Kt Cu World Copper Concentrate Market Balance 600 400 200 0 -200 -400 2002 2003 2004 2005 2006 2007 2008 Source: Brook Hunt Conc shortage to moderate, and then move to surplus 36
Slide 37: Business Outlook
Business Outlook Tc/Rc Concentrate market constrained with increasing capacity utilisation at smelters and fresh capacities coming online. Tc/Rc to be under severe pressure for the next 1-2 years. Production Decline in concentrates grades to constrain utilization levels Concentrate avail
Slide 38: To Sum up
To Sum up Metal prices may not remain at the current levels. Alumina prices already severely hit by increased supply. Input materials price inflation remains a concern. Domestic market continues in expansion mode. Sharper focus on value added exports. De-risking of product portfolio contin
Slide 39: Agenda
Backdrop Project Highlights Business Performance Review Business Outlook Detailed Q2 & H1 FY07 Financials
Slide 40: Results at a Glance: Q2 & H1 FY07
Results at a Glance : Q2 & HI FY07 QII FY'06 QII FY'07 HI FY'06 HI FY'07 Rs. Crore Act Act Act Act Net Sales & Op. Rev. 2,659 4,634 4,866 8,908 EBITDA 581 1,098 1,219 2,109 PBT 398 838 873 1,651 PAT 314 598 693 1,199 Growth in FY'07 (%) vs FY'06 vs FY'06 Net Sales 74% 83% EBITDA 89% 73% PBT 110% 89%
Slide 41: Drivers of Performance: Q2 FY07
Drivers of Performance : Q2 FY07 Particulars Unit Q2 FY07 Q2 FY 06 H1 FY07 H1 FY 06 Al LME $/T 2,482 1,830 2,565 1,810 Cu LME $/T 7,670 3,759 7,466 3,579 Re. / $ Rs. 46.37 43.69 45.95 43.64 Customs Duty (Al) % 8.1% 10.7% 8.1% 10.7% Cu Duty Differential % 5.7% 5.2% 4.70% 5.17% Domestic Aluminium Ingo
Slide 42: Detailed Financial Results Q2 FY07
Detailed Financial Results Q2 FY07 (In Rs. Crores) Q2 FY07 Q2 FY06 Chg % HI FY07 HI FY06 Chg % Net Sales & Operating Revenues 4,634.2 2,659.3 74% 8907.9 4866.4 83% Other Income 110.8 92.8 19% 188.4 126.3 49% EBITDA 1,097.1 580.6 89% 2108.2 1218.6 73% Interest & Finance Charges 51.5 53.9 4% 114.9 100
Slide 43: Segment Analysis
Segment Analysis Business Mix – Q2 FY07 Capital Employed 48% 52% EBIT 85% 15% Net Sales & Op. Revenue 40% 60% Rs. Crores Aluminium Copper Particulars Q2 FY07 Q2 FY06 % Chg Q2 FY07 Q2 FY06 % Chg Net Sales & Op. Revenues 1,852 1,413 31% 2,783 1,246 123% EBIT 671 435 54% 123 (69) - EBIT Margin 36.2% 30
Slide 44: Aluminium: Production Performance – Q2 FY07
Aluminium: Production Performance – Q2 FY07 Production Unit Q2 FY07 Q2 FY06 Chg % Alumina MT 290,462 286,000 2% Primary Metal MT 109,324 107,287 2% Wire Rod MT 17,255 17,014 1% Rolled Products MT 52,794 46,649 13% Extrusions MT 9,848 7,286 35% Foils MT 6,715 7,140 -6% Alloy Wheels Nos. 53,958 54,892
Slide 45: Copper: Production Performance – Q2 FY07
Copper : Production Performance – Q2 FY07 Production Unit Q2 FY 07 Q2 FY 06 % Chg Copper Cathodes MT 71,392 56,350 26.69% CC Rods MT 26,711 21,966 21.60% DAP/NPK MT 53,280 58,992 -9.68% Sulphuric Acid MT 249,586 159,028 56.94% Gold Kg 1,481 1,611 -8.05% Silver Kg 10,731 8,077 32.85% 45
Slide 46: www.hindalco.com
HINDALCO HIN DALCO ADITYA BIRLA GROUP www.hindalco.com
Slide 47: Aluminium: Sales Volumes
Aluminium: Sales Volumes Sales Tonnage Unit Q2 FY07 Q2 FY06 Chg % Alumina MT 87,819 90,735 -3% Primary Metal MT 33,817 39,282 -14% Wire Rod MT 17,556 17,277 2% Rolled Products MT 42,257 35,893 18% Extrusions MT 10,170 7,415 37% Foils MT 6,319 6,952 -9% Wheels Nos 51,755 45,525 14% 47
Slide 48: Copper: Sales Volumes
Copper: Sales Volumes Sales Volumes Unit Q2 FY 07 Q2 FY 06 % Chg Copper Cathodes MT 41,442 34,674 19.52% CC Rods MT 25,690 22,672 13.31% DAP/NPK MT 55,700 60,575 -8.05% Sulphuric Acid MT 144,841 81,708 77.27% Gold Kg 1,671 1,661 0.61% Silver Kg 11,528 9,648 19.49% 48
Slide 49: Press Release: Q2 FY2006-07
PRESS RELEASE Date: 18.10.2006 Q2 FY 2006-07 HINDALCO INDUSTRIES LTD. Hindalco posts outstanding results for the second quarter. Outstanding growth in Revenue - 74% YoY EBIDTA grows 89% to Rs. 1097.2 Crores Net profit at Rs. 597.6 Crores, up 90% YoY Financial Highlights Quarter Quarter Change Half Y
Slide 50: Press Release: Q2 FY07 Results
October 18, 2006 Press Release: Q2 FY07 Results Hindalco Industries Limited Hindalco Industries Ltd., the flagship Company of the Aditya Birla Group, has posted an outstanding performance for the quarter ending September 30th 2006. Net Sales & Operating Revenues grew by 74% from Rs. 2,659.30 Crores
Slide 51: Press Release: Copper and Expansion Projects
October 18, 2006 Press Release: Q2 FY07 Results Hindalco Industries Limited Copper Although poor quality copper concentrate hampered utilization levels, the progressive ramp up of Copper Smelter III, improved performance of Copper Smelter II and a stable output from Copper Smelter I led to higher co
Slide 52: Press Release: Industry Outlook
October 18, 2006 Press Release: Q2 FY07 Results Hindalco Industries Limited The Topographical Survey has been completed for Smelter. Applications for acquisition of appx. 5,000 acres of land shall be filed by next month. The project has received concurrence approval for sourcing 45 Cusecs of water p
Slide 53: Unaudited Financial Results Quarter Ended 30 September 2006
HINDALCO INDUSTRIES LIMITED Regd. Office: "Century Bhavan",3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 025 UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 30TH SEPTEMBER, 2006 (Rupees in Million) Quarter Quarter Half year Half year Year ended ended ended ended ended Particulars 30/09/2006
Slide 54: Segment-wise Revenue, Results and Capital Employed
HINDALCO INDUSTRIES LIMITED Regd. Office: "Century Bhavan",3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 025 SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED UNDER CLAUSE 41 OF THE LISTING AGREEMENT (Rupees in Million) Quarter Quarter Half year Half year Year ended ended ended ended ended Pa
Slide 55: Notes to Financial Results
HINDALCO INDUSTRIES LIMITED Regd. Office: “Century Bhavan”, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 030 Notes: 1. Accounting Standard 15 (revised 2005) on “Employee Benefits” became effective on 1st April, 2006. In accordance with the provisions of the Standard, the Company has made an a
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