Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — FY2008 Earnings Presentation
57 slides from Hindalco Industries's earnings presentation, Apr 30, 2008
Slide 1: Performance Review 2007-08
Hindalco Industries Limited Performance Review 2007-08 Presentation to the Investors 30th April’08 1
Slide 2: Backdrop & Highlights
Backdrop & Highlights Business Performance Project Highlights Detailed Financials 2
Slide 3: Backdrop: FY08, a Challenging year
Backdrop : FY08, a Challenging year Adverse Global Macro economic factors Sharp appreciation of INR Vs USD Energy prices reached all time high levels 110 10 48 46.37 100 97.9 9 8.75 46 45.47 Avg FY 07 - 45.5 90 8 44 80 11% 70 7 42 Avg FY 08 - 40.5 60 6 39.82 40 50 5 40 WTI Crude ($/bbl) 38 Nymex Nat
Slide 4: Backdrop: FY08 Challenges
Backdrop : FY08 Challenges Adverse Global Macro economic factors Average Al LME lower than last year Alumina Spot price remained subdued 700 3100 US$/Mt US$/Mt FY 07 Average- US$2,664 3000 600 610 FY08 Average- US$2,623 2900 2800 500 2700 FY 07 400 2600 FY 08 2500 373 300 2400 2300 200 FY07 FY08 220
Slide 5: Adversities On Domestic Front Too
Adversities On Domestic Front Too…… Aluminium import duty • Reduced Import duty 33.0% 31.0% 28.0% differential 19.0% 15.0% 10.6% 8.1% 5.7% o Aluminium Customs duty down from 8.08% to 5.72% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Copper Duty Differential 33.0% 30.0% o Copper duty differential down 20
Slide 6: Impact Of Adverse Macroeconomic Trends
Impact Of Adverse Macroeconomic Trends Sharp fall in Aluminium Realisations (Rs/Mt) (Rs/Mt) 135000 130000 131,124 130000 125,400 125000 125000 YOY drop11% QOQ drop15% 120000 120000 115000 115000 111,748 111,098 110000 110000 105000 105000 100000 100000 Q4 FY07 Q4 FY08 FY07 FY08 6
Slide 7: Copper - Strong Demand & Prices
Copper- Strong Demand & Prices Copper LME continues to be strong with Weakening spot TC/RC falling stock 250 (Mt) US$/Mt 1,600,000 9,000 Indexed.Indexed Base=100 1,400,000 8,000 200 LME CSP US$ 7,000 1,200,000 6,000 1,000,000 150 5,000 800,000 4,000 100 600,000 3,000 400,000 2,000 50 200,000 1,000 0
Slide 8: Hindalco's Actions
Hindalco’s Actions Some of these trends were anticipated well in advance and the following steps had already been taken: • Aluminium o Brownfield expansion: • Timely progress of Hirakud expansion led to incremental production growth of 35% compared to FY07 o De-bottlenecking smelter assets • At Renu
Slide 9: Hindalco's Actions contd
Hindalco’s Actions contd….. • Copper o Improved operating efficiency • Cathode production increased by 12% to 324KT (19% growth excluding production from Cu II in FY07) • Continuous Cast Rod production rose by 28% to 140KT • Conversion costs improved significantly o Improved geographic & product mix
Slide 10: FY 2008 at a Glance
FY 2008 at a Glance • Highest ever Aluminium production at 477,726 T 8% • Highest ever FRP production at 215,198 T 2% • Highest ever Extrusion Production at 43,315 T 13% Vs FY 2007 • Highest ever Copper cathode Production at 323,883 T 12% 19% growth excluding Cu II production in FY 07 • Highest ever
Slide 11: Financial Highlights – Q4 & FY08
Financial Highlights –Q4 & FY08 (Rs. Cr) Change Change Q4 FY08 FY08 (%) (%) Net Sales & Op. Revenue 5010 6% 19201 5% EBIDTA 941 -20% 3894 -11% Pre-tax profits 690 -28% 3026 -14% Net Profit 1077 49% 2861 12% Basic EPS (Per Share) 8.78 19% 24.51 -3% Note: 1. EBIDTA including other income 11
Slide 12: Backdrop & Highlights
Backdrop & Highlights Business Performance Project Highlights Detailed Financials 12
Slide 13: Aluminium Business
Aluminium Business 13
Slide 14: Aluminium performance affected by metal realisation drop
Aluminium Performance affected due to 11% drop in metal realisation & sharp increase in input costs. Aluminium (Rs.Cr) Q4 FY08 Change FY08 Change (%) (%) Net Sales & 1856 -9% 7145 -3% Operating Revenue EBIT 545 -31% 2423 -17% Note: As per SEBI Format 14
Slide 15: Adversity Mitigation: Consistent production growth
Adversity Mitigation: Consistent production growth Aluminium (Mt) 477,726 442,685 FY 06 FY 07 FY 08 429,140 215,198 211,088 190,580 71,814 68,998 67,730 43,315 38,282 28,721 27,645 32,326 26,184 Primary Metal Wire Rods FRP Extrusions Foils _______________________ Source: Company Data All round impro
Slide 16: Adversity Mitigation: Maximising sales revenue
Adversity Mitigation: Maximising sales revenue through Consistent increase in value added sales Improved Aluminium sales volume … volume…. (Mt) 480,000 ‘000 Mt 475,000 473,429 200 FY 06 FY 07 FY 08 180 470,000 180 170 465,000 160 152 460,000 +7% 140 455,000 120 450,000 100 445,000 80 441,301 440,000
Slide 17: High input costs affecting even global leaders; margins maintained
High input costs & adverse macro-economic factors are affecting even the global leaders; but our margins maintained EBIT comparison EBIDTA Margin fall contained 50% Q4 FY07 Q4 FY08 46% 120 45% 100 100 100 100 42% 100 38% 39% 40% 76 80 72 37% 34% 56 60 30% 31% 40 26 26% 20 22% 18% 0 Hindalco Global G
Slide 18: Copper Business
Copper Business 18
Slide 19: FY08 key levers of performance
FY 08 key levers of performance ……….. Copper • All round improvement in performance… o In FY 08, compared to FY 07 • Cathode production increased by 12% to 324KT • Continuous Cast Rod production rose by 28% to 140KT • Sulphuric Acid production increased by 15 % to 1,023KT • Sales volumes up 10 %, to
Slide 20: Strong production growth
Strong production growth Copper Copper Cathode Production Continuous Cast Rod Kt 350 323.9 Kt 290.4 160 300 139.8 12% 28% 250 120 109.0 200 80 150 100 40 50 0 0 FY 07 FY 08 FY 07 FY 08 Cathode Production up 12% CC Rod Production up 28%20
Slide 21: Improved Market Mix – Domestic Sale
Improved Market Mix – Domestic Sale Kt 180 167.0 150 37% 122.0 120 90 60 30 0 FY 07 FY 08 Benefits of increase in domestic sales and Market share partly negated by reduction in 21 duty differential
Slide 22: Improvement in bottom line despite drop in TCRC
Improvement in bottom line in spite of drop in the TCRC Copper TCRC , PBT & EBIT Indexed. Base=100 150 140 130 120 120 Reduction in finance cost by 110 better working 100 capital Management 100 100 97 100 90 Operational and by- product credits 80 Improvements 70 PBT EBIT TCRC 70 60 FY07 FY08 Better
Slide 23: Copper Business performance
Copper Business performance Copper (Rs.Cr) Change Change Q4 FY08 FY08 (%) (%) Net Sales & Operating 3,155 16% 12,066 10% Revenue EBIT 171 25% 503 -3% Note: As per SEBI Format 23
Slide 24: ABML – Highlights
ABML – Highlights • Highest Metal production since acquisition of mines. • Long Hole – Stope mining has successfully been implemented in the Nifty undergound mine. • The project for Oxide Heap re-treatment has been taken forward – construction of screening and washing plant is in progress. • Ongoing
Slide 25: ABML FY08 Performance
ABML FY 08 Performance Production Performance of ABML and Nifty Sulphide Cu/MT Cu/MT ABML 60000 100000 Nifty 53,397 90000 82,395 50000 80000 41% 70000 40000 58,416 171% 60000 50000 30000 40000 19,710 20000 30000 20000 10000 10000 0 0 FY 07 FY 08 FY 07 FY 08 ABML production leaped as Nifty production
Slide 26: ABML Financials – FY08
ABML Financials – FY 08 (Rs. Crs) FY07 FY08 Chg (%) Net Sales 1127 2335 107% EBIT 39 562 1342% Operating Cash Flow* -390 447 215% * Operating Cash Flow is after capex and mine development expenditure 600 562 500 EBIT Trend (Rs. Crs) 400 300 Rs. Crs 200 100 0 39 FY 05 FY 06 FY 07 FY 08 -100 -40 -200
Slide 27: Backdrop & Highlights
Backdrop & Highlights Business Performance Project Highlights Detailed Financials 27
Slide 28: Muri Alumina Expansion
Muri Alumina Expansion • Basic & Detailed Engineering - Completed • Environmental Clearance -“Consent to Operate” application filed on 24.11.07. o Inspection completed. Deemed consent • Other Statutory Clearances - Obtained • Land for future mud disposal site - Notification & acquisition by Govt. aw
Slide 29: Muri Expansion
Muri Expansion Bauxite Handling LT digester flash tanks New HRD/Washers New Precipitation Growth 29 tanks
Slide 30: Hirakud Expansion
Hirakud Expansion • Smelter – Phase-I (35 kTPA expn.)- o Completed in Dec’06 & operation stabilized. o Phase-II (43 kTPA expn.)– o Conversion of 228pots completed and operations stabilized o Conversion of balance 172 pots has commenced. o Completion Date of Phase II: Q2 ’FY 08-09 Conversion of pot r
Slide 31: Greenfield Project – Utkal Alumina
Greenfield Project – Utkal Alumina • Bauxite Mining Capacity of 4,500 KTPA & Refining capacity of 1,500 KTPA. • Detailed Engineering in progress for Non-Alcan areas as well as for Alcan areas. • 93% of total land in possession. Boundary Wall remains to be completed. • Mines detailed Engineering star
Slide 32: Utkal Alumina
Utkal Alumina Laxmipur Bridge – open for vehicle traffic Precipitation Tanks – pile cap foundations under progress 32 Non-plant buildings - Piling work in progress Datamine Software- Training in progress
Slide 33: Greenfield Projects – Aditya
Greenfield Projects – Aditya • Refining Capacity – 1500 KTPA, Smelter Capacity – 358 KTPA & CPP Capacity – 900 MW. • Technology agreement with Aluminium Pechiney (AP) signed. SIA clearance from Government received. Alumina Technology tie up with ALCAN signed • EPCM contract for 900MW power plant pla
Slide 34: Mahan Aluminium Project
Mahan Aluminium Project • Smelter Capacity- 359 KTPA & CPP capacity – 900 MW o Land: a). Deposited Rs 53 Crs. for acquisition of 3096 acres of private land. Sect(6) notification issued. b) 2nd set of application for 1730 Acres of land submitted • Coal: Coal block allotted in Apr’06 in JV with ESSAR.
Slide 35: Latehar Aluminium Project
Latehar Aluminium Project • Smelter Capacity- 359 kTPA & CPP capacity – 900 MW • Tubed Coal Mine Allotted- o Joint venture formed between Tata power and Hindalco. JV agreement in progress o Water Allocation – awaiting clearance from GoJ for 70 MCM water from Subernrekha basin. o Land Acquisition: Fe
Slide 36: To Sum Up
To Sum Up ………. o A Challenging year, on account of macroeconomic factors & these factors are here to stay…… o Reasonably accurate anticipation of the adverse trend and the remedial steps taken to face the emerging challenges have helped in containing the adverse impact o TCRC will continue to have a
Slide 37: Backdrop & Highlights
Backdrop & Highlights Business Performance & Outlook Project Highlights Detailed Financials 37
Slide 38: Detailed Financials
Detailed Financials Q4 Q4 % % Rs.Crs. FY 07 FY 08 FY 07 FY 08 change change Net Sales 4,749 5,010 6% 18,313 19,201 5% Total Expenditure 3,699 4,213 14% 14,298 15,800 11% Other Income 123 144 17% 370 493 33% PBDIT 1,173 941 -20% 4,385 3,894 -11% Depreciation 145 152 5% 553 588 6% Impairment 13 85 PBI
Slide 39: Segment Analysis
Segment Analysis Business Mix – FY08 Segment Analysis FY08 C.E 60% 40% Net Sales 37% 63% EBIT 83% 17% Aluminium Copper Aluminium Copper Particulars Rs Crs. FY07 FY08 % Chg FY07 FY08 % Chg Net Sales 7,344 7,145 -3% 10,978 12,066 10% EBIT 2,929 2,423 -17% 517 503 -3% EBIT Margin 39.9% 33.9% 4.7% 4.2%
Slide 40: Summary
Summary Rs.Crs. Segment Information Company Information Other Unallocable Tax Reported Al EBIT Cu EBIT Interest PBT Tax PAT Income expenses W/Back PAT FY 07 2929 517 (242) 370 (69) 3505 (940) 2564 0 2564 FY 08 2423 503 (281) 493 (113) 3026 (705) 2320 541 2861 Change (506) (14) (38) 123 (44) (479) 23
Slide 41: Other Income – FY08
Other Income –FY08 Rs. Crs 493 • Other Income ⇧ from Rs 370 Crs to Rs 493 Crs 102 • Treasury income higher by Rs 174 Crs mainly 370 due to o Higher pre-tax treasury yield at 10.69% 153 against 9.84%. o Higher average treasury at Rs.5670 Crs vs. Rs.3636 Crs. 391 217 • Non Treasury income lower by Rs.
Slide 42: Interest & Finance Charges – FY08
Interest & Finance Charges – FY08 Rs. Crs 640 • Net and Gross interest is higher due to FY07 FY08 534 o Higher average borrowings at Rs.8102 Crs against Rs.7419 Crs o Higher average rate at 7.51% against 281 242 7.24%. Average Interest rate higher on account of drawal against syndicated rupee loan a
Slide 43: Taxes – FY08
Taxes – FY08 Rs. Crores • Provision for Taxes lower due to :- o Lower PBT 940 o Decrease in effective tax rate from 27% to 705 23 % due to proportionately higher 88 exempt income in FY08. 995 o Higher capitalization led to lower current 617 tax and higher deferred tax o In FY 07 Deferred tax assets
Slide 44: Aluminium: Production
Aluminium : Production = Tonnes PRODUCTION Q4 FY07A Q4 FY08A % Chg FY07 FY08 % Chg Alumina 296,411 303,928 3% 1,198,658 1,192,709 0% Metal 114,334 121,329 6% 442,685 477,726 8% Wire Rods 16,948 17,892 6% 68,998 71,814 4% Rolled Products 48,322 40,794 -16% 211,088 215,198 2% Extrusions 9,525 10,371 9
Slide 45: Copper: Production
Copper : Production Production Unit Q4 FY07 Q4 FY08 % Chg FY07 FY08 % Chg Copper Cathodes MT 81,460 87,134 7% 290,425 323,883 12% CC Rods MT 30,076 35,932 19% 109,033 139,833 28% DAP/NPK MT 53,794 43,187 -20% 219,333 149,590 -32% Sulphuric Acid MT 240,860 279,978 16% 892,597 1,023,422 15% Gold Kg 2,
Slide 46: Aluminium: Sales Revenue
Aluminium : Sales Revenue Rs.Crs Sales Revenue Q4FY07 Q4FY08 % Chg FY07 FY08 % Chg Alumina 197 153 -22% 732 594 -19% Primary Metal 537 465 -13% 1,723 1,673 -3% Wire Rod 233 219 -6% 915 845 -8% Rolled Products 692 608 -12% 2,546 2,461 -3% Extrusions 171 164 -4% 614 651 6% Foils 132 157 19% 543 577 6%
Slide 47: Copper: Sales Revenue
Copper : Sales Revenue Rs.Crs Product Q4 FY 07 Q4 FY 08 % Chg FY 07 FY 08 % Chg Copper Cathodes 1,391 1,535 10.3% 5,766 5,592 -3.0% CC Rods 868 1,163 34.1% 3,572 4,616 29.2% DAP/NPK 84 77 -9.0% 348 263 -24.4% Sulphuric Acid 13 66 389.9% 48 160 231.0% Gold 280 206 -26.5% 944 856 -9.3% Silver 36 34 -4
Slide 48: Aluminium: Sales Volume
Aluminium : Sales Volume Sales Tonnage Q4FY07 Q4FY08 % Chg FY07 FY08 % Chg Alumina 86,428 62,197 -28% 299,762 259,627 -13% Primary Metal 41,531 41,394 0% 137,975 150,649 9% Wire Rod 17,439 18,370 5% 69,067 71,769 4% Rolled Products 45,860 47,055 3% 170,413 180,259 6% Extrusions 10,429 10,962 5% 38,4
Slide 49: Copper: Sales Volume
Copper : Sales Volume Sales Volumes Unit Q4 FY07 Q4 FY08 % Chg FY07 FY08 % Chg Copper Cathodes & MT 51,275 49,131 -4.2% 181,944 181,641 -0.2% Others CC Rods MT 31,039 35,179 13.3% 109,510 138,543 26.5% DAP/NPK MT 54,389 43,666 -19.7% 220,935 148,250 -32.9% Sulphuric Acid MT 153,789 203,817 32.5% 559
Slide 50: Hindalco Q4 FY 2007-2008 Results
PRESS RELEASE 30 April 2008 Hindalco Industries Limited Q4 FY 2007-2008 Results Revenues Rs. 5,010 crores PAT Rs. 1,077 crores Quarter Quarter Year Year ended ended ended ended (In Rs. crores) 31-Mar-08 31-Mar-07 31-Mar-08 31-Mar-07 Net sales and operating revenues 5010.2 4748.9 19201.0 18313.0 Othe
Slide 51: Financials – Q4FY08
Financials – Q4FY08 For the quarter ended March 31, 2008, the company achieved net revenues of Rs.5010 crores as compared to Rs. 4749 crores for the corresponding period in FY 07. The net profit before tax for the quarter is Rs. 691 crores vis-à-vis Rs. 958 crores in the corresponding period of the
Slide 52: Operational Review
Adjustment for earlier year (net) under tax expenses includes write back of provision for tax resulting from change in estimation of tax liability on progress in tax assessments. Dividend The board shall consider recommendation of dividend for FY08 at the time of approval of audited accounts. Operat
Slide 53: Expansion projects
Expansion projects Muri The expansion of the Muri Alumina refinery from 110,000 tpa to 450,000 tpa is under commissioning in a phased manner. The entire steam and power requirement is being met by the new captive power plant. The production from the expanded facility is being ramped up progressively
Slide 54: Industry outlook
implementation. Key equipments have arrived at site and are under installation. The project is slated to be completed by July’08 Industry outlook Aluminium Global primary aluminium consumption has witnessed a strong growth of 9.3 % from FY07 to FY08. China is the strongest driver of the demand as th
Slide 55: Unaudited Financial Results for Quarter Ended 31 March 2008
HINDALCO INDUSTRIES LIMITED Regd. Office: "Century Bhavan", 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 030 UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 31ST MARCH, 2008 (Rupees in Million) Quarter Quarter Year Year ended ended ended ended Particulars 31/03/2008 31/03/2007 31/03/2008 31
Slide 56: Segment-wise Revenue, Results and Capital Employed
HINDALCO INDUSTRIES LIMITED Regd. Office: "Century Bhavan", 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 030 SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED UNDER CLAUSE 41 OF THE LISTING AGREEMENT (Rupees in Million) Quarter Quarter Year Year ended ended ended ended Particulars 31/03/2008
Slide 57: Notes to results
HINDALCO INDUSTRIES LIMITED Regd. Office: “Century Bhavan”, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai-400 030 Notes: 1. Upon receipt of all requisite approvals, Indian Aluminium Company, Limited, a subsidiary of the Company, has been amalgamated with the Company with effect from 1st April, 200