Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q3 FY08 Earnings Presentation
28 slides from Hindalco Industries's earnings presentation, Jan 30, 2008
Slide 1: Performance Review Q3 FY08
Hindalco Industries Limited Performance Review Q3 FY08 30th January’08
Slide 2: Highlights & Backdrop
Highlights & Backdrop
Slide 3: Backdrop: Q3 FY08
Backdrop : Q3 FY08 Adverse Global Macro economic factors US Sub prime crisis – a double barrel impact: A sharp drop in the US primary aluminium consumption as the two major aluminium consuming sectors, housing & automobile witnessed a significant slow down and Weakening dollar (INR appreciated
Slide 4: Adverse Global Macro economic factors
Adverse Global Macro economic factors Primary aluminium production growth rate out stripped demand growth rate primarily on account of Decline in the demand from the US and Japan Increased supply from the US & Chinese smelters due to high aluminium prices in the previous quarters (in USD terms
Slide 5: Adversities On Domestic Front Too
Adversities On Domestic Front Too…… Aluminium import duty Reduced Import duty 33.0% 31.0% 28.0% differential 19.0% 15.0% Aluminium Customs duty 10.6% 8.1% 5.7% down from 8.08% to 5.72% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Copper Duty Differential 33.0% 30.0% 20.0% 18.8% Copper duty differen
Slide 6: Impact Of Adverse Macroeconomic Trends
Impact Of Adverse Macroeconomic Trends Aluminium stocks going up there by pulling Significant fall in Al LME (in INR & USD terms) down LME to the lowest level in last two years during Q3 FY08…… (Mt) US$/Mt 2,750 LME US$ 130,000 123,077 125,000 1,200,000 3,800 2,700 LME INR 1,100,000 3,240 2,650 120,
Slide 7: Copper - Strong Demand & Prices
Copper- Strong Demand & Prices Copper LME continues to be strong with Weakening spot TC/RC falling stock (Mt) US$/Mt 140 1,600,000 8,000 Indexed. Base=100 120 1,400,000 7,000 LME CSP US$ 1,200,000 6,000 100 1,000,000 5,000 80 800,000 4,000 60 600,000 3,000 40 400,000 2,000 20 200,000 1,000 0 Aug-05
Slide 8: Hindalco's Actions
Hindalco’s Actions…… Some of these trends were anticipated and the following steps had already been planned: 1. Brownfield expansions Aluminium o Hirakud production grew by 46% compared to Q3 FY07 on the back of expanded capacity Alumina o Muri commissioning in progress 2. Metal Production gro
Slide 9: Hindalco's Actions
Hindalco’s Actions…… 3. Continued sweating of assets in downstream businesses resulting in increased production 4. Focus on improving the realisations of value added products F 9
Slide 10: Financial Highlights – Q3 & 9M FY08
Financial Highlights –Q3 & 9M FY08 (Rs. Cr) Change Change Q3 FY08 9M FY08 (%) (%) Net Sales & Op. Revenue 4,532 -3% 14,169 4% EBIDTA 915 -17% 2,955 -8% Pre-tax profits 707 -21% 2,340 -8% Net Profit 543 -16% 1,788 -3% EPS (Per Share) 4.42 -32% 15.58 -17% F 10
Slide 11: All round increase in production
All round increase in production Aluminium (Mt) Q3 FY07 Q3 FY08 121,971 111,871 58,000 59,365 18,458 17,777 11,472 10,364 6,234 6,472 Primary Metal Wire Rods FRP Extrusions Foils _______________________ Source: Company Data All round improvement in production F 11
Slide 12: Higher Sales Volume
Higher Sales Volume Aluminium Sharp improvement in Aluminium sales volume Accompanied with increased value added Sales (Mt) (Mt) 125000 140,000 121,991 Primary Value added 120000 120,000 100,000 +5% +12% 115000 63,747 80,000 60,472 60,000 110000 108,935 40,000 +20% 58,244 105000 48,461 20,000 0 1000
Slide 13: Copper: key levers of performance
Copper: key levers of performance……….. Copper Cathode production rose by 7 % compared to Q3 FY07 to 78KT. Continuous Cast Rod production rose by 38% compared to Q3 FY07 to 34KT Sales increased by 4 % compared to Q3 FY07 to 79KT Operating efficiency and Conversion cost improved. Better real
Slide 14: Detailed Financials
Detailed Financials
Slide 15: Drivers of performance Q3 FY08
Drivers of performance Q3 FY08 Particulars Unit Q3 FY08A Q3 FY07A Al LME $/t 2,443 2,723 Re. / USD Rs. 39.7 45.2 Al. Basic Customs Duty % 5.0 7.5 Domestic Ingot Realisation Rs/t 103,137 126,679 Copper Tc/Rc c/lb 21.7 37.0 Cu LME $/t 7,220 7,039 Cu Duty Differential % 3.10 5.10 F 15
Slide 16: Detailed Financial Results Q3 FY08
Detailed Financial Results Q3 FY08 Rs.Crs. Q3 Q3 % YTD YTD % FY 08 FY 07 change FY 08 FY 07 change Net Sales 4,532 4,656 -3% 14,169 13,564 4% Total Expenditure 3,731 3,611 3% 11,563 10,599 9% Other Income 114 58 96% 349 247 41% PBDIT 915 1,104 -17% 2,955 3,212 -8% Depreciation & Impairment 146 139 5
Slide 17: Aluminium
ALUMINIUM
Slide 18: Aluminium: Production Performance – Q3 FY08
Aluminium: Production Performance – Q3 FY08 Unit Q3 FY08A Q3 FY07A % Chg Alumina MT 304,059 308,344 -1.4% Metal MT 121,971 111,871 9.0% Wire Rods MT 18,458 17,777 3.8% Rolled Products MT 59,365 58,000 2.4% Extrusions MT 11,472 10,364 10.7% Foil MT 6,474 6,234 3.8% Alloy Wheels Nos. 41,368 51,364 -19
Slide 19: Aluminium: Sales Revenues – Q3 FY08
Aluminium: Sales Revenues – Q3 FY 08 Sales Revenue Unit Q3 FY08A Q3 FY07A % Chg Alumina Rs.Crs. 131 141 -7% Primary Metal Rs.Crs. 415 392 6% Wire Rod Rs.Crs. 198 233 -15% Rolled Products Rs.Crs. 614 652 -6% Extrusions Rs.Crs. 165 163 1% Foils Rs.Crs. 125 143 -12% Wheels Rs.Crs. 9 10 -9% Others Rs.Cr
Slide 20: Aluminium: Sales Volumes – Q3 FY08
Aluminium: Sales Volumes – Q3 FY 08 Sales Tonnage Unit Q3 FY08A Q3 FY07A % Chg Alumina MT 57,343 56,998 1% Primary Metal MT 40,167 31,025 29% Wire Rod MT 18,077 17,436 4% Rolled Products MT 46,014 43,537 6% Extrusions MT 11,333 10,273 10% Foils MT 6,400 6,664 -4% Wheels Nos 37,734 44,065 -14% F 20
Slide 21: Copper
COPPER
Slide 22: Copper: Production Performance – Q3 FY08
Copper : Production Performance – Q3 FY08 Production Unit Q3 FY08 Q3 FY07 % Chg Copper Cathodes MT 78,333 72,904 7.4% CC Rods MT 34,471 24,942 38.2% DAP/NPK MT 36,066 39,757 -9.3% F 22
Slide 23: Copper: Sales Revenues – Q3 FY08
Copper: Sales Revenues - Q3 FY 08 Rs. Crs. Product Q3 FY 08 Q3 FY 07 % Chg Copper Cathodes 1273.3 1508.2 -15.6% CC Rods 1071.6 861.7 24.4% DAP/NPK 67.1 56.6 18.7% Sulphuric Acid 53.1 12.2 334.8% Gold 187.9 269.3 -30.2% Silver 24.7 15.9 55.1% Others 128.5 138.2 -7.0% Total Sales 2806.2 2862.0 -2.0% o
Slide 24: Copper: Sales Volumes
Copper : Sales Volumes Sales Volumes Unit Q3 FY08 Q3 FY07 % Chg Copper Cathodes & Others MT 44,495 50,391 -11.7% CC Rods MT 34,317 25,209 36.1% DAP/NPK MT 36,178 37,181 -2.7% Sulphuric Acid MT 182,757 153,731 18.9% Gold Kg 2,002 3,060 -34.6% Silver Kg 1,4503 8,896 63.0% F 24
Slide 25: Company Results
Company Results Segment Rs.Crs. Company Information Information Other Unallocable Al EBIT Cu EBIT Interest PBT Tax PAT Income expenses Q3 of 755.5 159.5 -69.8 58.4 -8.1 895.5 -251.6 643.9 FY07 Q3 of 578.9 94 -62.2 114.3 -18.3 706.7 -164.0 542.7 FY08 Change -176.6 -65.5 7.6 55.9 -10.2 -188.8 87.6 -10
Slide 26: Other Income – Q3 FY08
Other Income – Q3 FY08 Rs. Crs Other Income up from Rs 58 Crs to Rs 114 Crs 114 23 Non Treasury income increased by Rs 6 Crs 58 Treasury income is higher by Rs 50 Crs 17 91 due to: ¾ Higher pre-tax treasury yield at 11.5% 41 against 9.3% in the corresponding Treasury quarter last year Treasury In
Slide 27: Interest & Finance Charges – Q3 FY08
Interest & Finance Charges – Q3 FY08 Q3 FY07 Q3 FY08 Gross and Net interest is Rs. Crs 163 lower due to 151 Lower average borrowing at 70 62 Rs.8,005 Crs against Rs.8,910 Crs. Net Interest Gross Interest Average interest rate increased from 7.32% to 7.56% F 27
Slide 28: Taxes – Q3 FY08
Taxes – Q3 FY08 Rs. Crores 251.58 Provision for Taxes lower due to :- 163.45 Decrease in effective tax rate from 28.1% to 23.2% due to proportionately higher exempt income 305.80 in the current Quarter 25.29 138.16 Higher capitalization led to lower current tax and higher deferred tax (54.22)