Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q3 FY2011 Earnings Presentation
33 slides from Hindalco Industries's earnings presentation, February 2011
Slide 1: Hindalco Industries Ltd Investor Presentation Q3 FY11
Hindalco Industries Ltd Investor Presentation Q3 FY11 FEBRUARY 2011
Slide 2: Contents
Contents RESULT HIGHLIGHTS ALUMINIUM BUSINESS REVIEW COPPER BUSINESS REVIEW PROJECTS UPDATE NOVELIS UPDATE
Slide 3: Result Highlights
rill ADITYA BIRLA Result Highlights
Slide 4: Financial Performance
Financial Performance ` Cr Q3 FY10 Q3 FY11 Change (%) Net Sales 5,314 5,975 12.4 PBITDA 798 801 04 0.4 PBT 557 578 3.9 PAT 427 460 7.8 EPS (`) 2.41 2.41 … •EPS maintained as growth in net profit compensated for increase in outstanding shares from 177 crs to 191 crs ` Cr 9M FY10 9M FY11 Change (%) Ne
Slide 5: Focus Areas
Focus Areas Maintaining Profitability in the wake of cost pressures Improving FY11 Improving Capital Free cash structure Objectives flow Fast track organici growth projects
Slide 6: Highlights
Highlights y Net profit up 8%(YoY) and 6% (QoQ) amidst cost pressures and certain operational p setbacks y Hirakud operations had lingering effect of July fire, almost stabilized by January y Cooling tower problem in Cu-III; operations re-started in just 17 days y Highest ever alumina production at
Slide 7: Hindalco: Confluence of one-off disturbances
Hindalco: Confluence of one-off disturbances • July fire incident continued to affect production Hirakud • Q3 output higher by 11kt vs. Q2, but 9 kt lower on YOY basis 9 Operations normalized now and Q4 volumes expected to reach pre-accident level • Breakdown of cooling g tower of SAP-3 Dahej • Cath
Slide 8: Key Business Drivers and Impact
Key Business Drivers and Impact Change ( %) Driver Impact YOY Aluminium LME 17 Average C Copper TC/RC (26) Exchange (4) Rate (`/$) Crude derivative > 25% costs 8
Slide 9: Moderation of India market growth hampering mix
Moderation of India market growth hampering mix Moderation in Indian market growth 20 India – Industrial growth (%) Aluminium Consumption (kt) 18 17.7 1,524 11% 16 1,378 488 14 469 Q3 ▲4% 12 10 910 1035 H1 ▲14% 8 6 9M FY10 9M FY11 4 2 16 1.6 Copper Consumption* Consumption (kt) 0 334 320 Jan-09 Dec-
Slide 10: Industry reeling under Strong Cost Push
Industry reeling under Strong Cost Push CP Coke Furnace oil/LNG Coal All energy prices up sharply International coal > 20% CP coke > 45% Furnace oil, natural gas > 15%
Slide 11: Aluminium: Performance Review
Aluminium: Performance Review 11
Slide 12: Production Performance
Production Performance Alumina (kt) Metal (kt) 450 417 399 1100 400 1000 350 117 H’kud 90 1,009 300 900 964 250 800 200 700 150 300 308 100 00 600 50 R’k t R’kut 500 0 9M FY10 9M FY11 9M FY10 9M FY11 Wire Rods (kt) FRP (kt) 80 165 70 71 150 157 69 152 60 135 50 120 12 9M FY10 9M FY11 9M FY10 9M FY11
Slide 13: Optimised Sales Mix
Optimised Sales Mix Hydrate / Alumina sales jumped with proportionate increase in specials Improved Geographic mix 24% 87 9 kt 87.9 70.6 kt 15% 13% 43.8 Specials Exports 35.5 85% 87% Standard Domestic 44.1 35.1 Q3 FY10 Q3 FY11 Q3 FY10 Q3 FY11 13
Slide 14: Aluminium Business: Financial Performance
Aluminium Business: Financial Performance Q3 FY10 Q3 FY11 Change (%) (` cr) Net Sales & Operating 1,884 1,977 4.9 Revenue EBIT 438 465 6.2 9M FY10 9M FY11 Change g (%) ( ) (` cr) Net Sales & Operating 4,951 5,754 16.2 R Revenue EBIT 1,152 1,441 25.1 Cost pressures and volume losses have impacted Q3
Slide 15: Copper: Performance Review
Copper: Performance Review 15
Slide 16: Copper: External Drivers
Copper: External Drivers Driver Current Assessment Impact TCRC • Long term TCRC lower than last year LME/INR • LME being supported by liquidity INR •Appreciating rupee Acid prices • Recently on an improving trend Energy • Correlated with commodity cycle; likely to be prices firm Ch ll Challenging i
Slide 17: Cu: Production Performance
Cu: Production Performance Cathode (kt) 3% Own CCR(kt) 19% 259 251 111 93 9M FY10 9M FY11 9M FY10 9M FY11 Sulphuric Acid (kt) DAP(kt) 23% 1% 161 809 817 131 9M FY10 9M FY11 9M FY10 9M FY11 Cooling tower problem affected cathode output, but fertilizer stream 17 was optimised
Slide 18: Copper Business: Financial Performance
Copper Business: Financial Performance Q3 FY10 Q3 FY11 Change (%) (` cr) Net Sales & Operating 3,432 4,000 16.6 Revenue EBIT 159 143 ( (10.3) ) 9M FY10 9M FY11 Change (%) Net Sales & Operating 9,180 11,265 22.7 Revenue EBIT 533 396 (25.7) Q3: Adverse impact due to cooling tower problem 18
Slide 19: Projects Update
rill ADITYA BIRLA Projects Update
Slide 20: Greenfield Projects Update
Greenfield Projects Update Project Progress Expected completion Mahan Major approvals in place, orders placed, 17000 Aluminium, u u , MP people peop e at ssite, te, major ajo co contractors t acto s mobilized ob ed fully, u y, October 2011 Octobe 0 90% of project cost committed, syndication for rupe
Slide 21: Mahan Smelter
Mahan Smelter Pot room Cathode sealing shop GTC1 G C ID Fan a foundations ou dat o s & Stac Stack : C b area Carbon Overview- Smelter site 21
Slide 22: Utkal Refinery
Utkal Refinery Site Overview Precipitation tanks Boilers ESP Boilers, ESP, Chimney and STG BTG Package P k 22
Slide 23: Aditya Smelter & CPP
Aditya Smelter & CPP Pot Room foundation 220 KV Rectifier Substation ID Fan Foundation GTC P Power House H U Unitit 4 23
Slide 24: Novelis Update
Novelis Update ADITYA BIRLA
Slide 25: Novelis: Third Quarter Financial Highlights
Novelis: Third Quarter Financial Highlights (Q3FY11 vs. Q3FY10) Shipments Up 10% to 715 Kilotonnes Net Sales Up 21% to $2.6 Billion Adjusted EBITDA Up 20% to $238 Million Free Cash Flow of $45 Million Liquidity of $848 Million Net Loss of $46 Million driven by refinancing & restructuring
Slide 26: Adjusted EBITDA
Adjusted EBITDA (Millions) Adjusted EBITDA Trend TTM Adjusted EBITDA $1,200 $300 290 1,022 263 $1,000 231 238 199 $800 $200 576 $600 $400 $100 $200 $0 $0 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 TTM Ended TTM Ended Q3FY10 Q3FY11 Trailing Twelve Months Adjusted EBITDA has Exceeded $1B
Slide 27: Novelis – Refinancing Objective
Novelis – Refinancing Objective Ensure strategic flexibility Deleverage Hindalco for both Novelis and b l balance sheet h t and d align li Hindalco 1 leverage to debt capacities 6 Retain flexibility to finance growth Improve Maturity profile of aspirations of Novelis and 2 Hindalco and maintain 5 No
Slide 28: Deal Contours
Deal Contours Novelis proforma capital structure US$ Mn Use of proceeds Asset Based Revolving 800 Refinance approx. US$ 2.5 Bn of Credit Facility existing indebtedness Term Loan 1,500 ABL due 2012 and Term Loan facility due 2014 Senior Notes (Dec 1,100 2017) 7.25% Senior Notes due 2015 Senior
Slide 29: Implication of Refinance
Implication of Refinance Original Post Refinance Novelis Inc Equity Equity US$3.5 billion US$1.8 billion AV Metals M t l IInc Equity Equity US$3 5 billion US$3.5 US$1.8 $ billion AV Minerals Loan USD 1 Bn (Netherlands) BV 1. Equity US$2.5 Bn Equity 2. Guarantee for Loan US$1.8 billion USD $ 1 Bn 29
Slide 30: Key External Drivers - Outlook
Key External Drivers - Outlook Driver Current Assessment Impact LME • Investor In estor appetite is ssupportive, pporti e bbutt ffurther rther upside pside seems limited INR USD • Uncertainty over FII flows may hold rupee appreciation, despite general USD S weakness Energy, • Upward pressure related
Slide 31: 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. implied Important factors that could make a differenc
Slide 32: Thank you
Th k you Thank 32
Slide 33: Sales Revenue
Sales Revenue Aluminium Sales Units 9M FY10 9M FY11 % chg Chemicals Rs Crs 418 561 34% Primary metal Rs Crs 2,105 2,373 13% Flat Rolled Products Rs Crs 1,913 2,141 12% Extruded products Rs Crs 391 426 9% Others Rs Crs 124 252 103% Copper 33
Hindalco Industries — Q3 FY2011 Earnings Presentation on 6ix