Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q2 FY11 Earnings Presentation
38 slides from Hindalco Industries's earnings presentation, November 2010
Slide 1: Hindalco Industries Ltd Investor Presentation Q2 FY11
Hindalco Industries Ltd Investor Presentation Q2 FY11 November 2010
Slide 2: Agenda
Industry Backdrop Results Highlights Aluminium: Business Conditions & performance Review Copper: pp Business Conditions & p performance Review Projects – An Update
Slide 3: Industry Backdrop
rill ADITYA BIRLA Industry Backdrop
Slide 4: Robust growth in global metals consumption
Robust growth in global metals consumption … … though supported by re-stocking / base effect / stimuli Aluminium Consumption Copper Consumption World (Mn ton, ton annualized) (Mn ton, ton annualized) 18% 8% 17.5 19.3 41.9 41.6 18.5 17.9 17.9 37.4 37.8 17.0 34 3 34.3 RoW o 11.1 6.0 16% 9% 7.2 10.0 12
Slide 5: Indian Growth Momentum to Continue
Indian Growth Momentum to Continue Aluminium consumption (kt) Electrical & Electronics 966 y Large scope for Building & Construction 910 metal consumption to rise from current levels H1 FY10 H1 FY11 Consumer Durable y End user 6% segments have a strong/positive A t Automobile bil & Transport T t out
Slide 6: Result Highlights
rill ADITYA BIRLA Result Highlights
Slide 7: Q2 FY 11: Highlights
Q2 FY 11: Highlights 7 Robust Performance amidst challenging conditions
Slide 8: Proactive Steps
Proactive Steps Higher Aluminium VAP Sales Highest Ever production Improved Mix of CCR ¾Hirakud Smelter outage Highest Ever Production at ¾ Lower Cu Premium Efficiencies i improvement Muri in Aluminium ¾Coal Price Surge Reduced Inventory levels to Efficiencies improved increase the metal sales. sale
Slide 9: Financial Performance
Financial Performance ` Cr Q2 FY10 Q2 FY11 Change (%) Net Sales 4,915 5,860 19 PBITDA 666 780 17 PBT 434 556 28 PAT 344 434 26 EPS (`) 2.02 2.27 12 ` Cr H1 FY10 H1 FY11 Change (%) Net Sales 8,812 11,038 25 PBITDA 1,500 1682 12 PBT 1 034 1,034 1 229 1,229 19 PAT 825 968 17 EPS (`) 4.85 5.06 4 Q2 prof
Slide 10: Aluminium: Business Conditions & Performance Review
Aluminium: Business Conditions & Performance Review 10
Slide 11: Al: External Drivers
Al: External Drivers Driver Current Assessment Impact LME • Support from global liquidity and cost pressures, but downside risks related to rewind of financing deals INR USD • USD weakness and continued FII flows to India may lead to rupee appreciation Input • Upward pressure related to coal and car
Slide 12: Aluminium Industry: Cost push to continue
Aluminium Industry : Cost push to continue World average hot metal cost Composition Others 10% Alumina Carbon cost - Resource companies - Correlated with insisting on short-term commodity price cycle 13% contracts 38% - De coupling of alumina & aluminium Labour cost - Hardening of 7% emerging market
Slide 13: Strong Production performance despite Hirakud production loss
Strong Production performance despite Hirakud production loss Alumina (kt) 11% Metal (kt) 12% Growth in Output 140 (H1 FY11 vs H1 FY10) 123 H’kud 347 H’kud Alumina 10% Metal -4% 312 100 103 FRP 3% R’koot R’koot Extrusions 3% Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11 FRP (ton) 2% Extrusions (ton) Adverse impac
Slide 14: Steps taken to minimise impact of Hirakud production loss
Steps taken to minimise impact of Hirakud production loss Increased third-party sale of Improved sales mix specials and standard 138 kt 128 kt Primary-Exp 100.0 84 kt 90.0 80 0 80.0 48% 49% 54 kt Primary- 70.0 34.2 Dom ▼6% 60.0 50.0 40.0 33.5 VAP 44% 50% ▲6% 30.0 20.0 10.0 0.0 Q2 FY10 Q2 FY11 Q2 FY1
Slide 15: Q2 FY 11: Strong Aluminium numbers
Q2 FY 11: Strong Aluminium numbers 15
Slide 16: Aluminium Business: Financial Performance
Aluminium Business: Financial Performance Q2 FY10 Q2 FY11 Change (%) (` cr) Net Sales & Operating 1,649 1,911 16 Revenue EBIT 259 424 64 H1 FY10 H1 FY11 Change (%) (` cr) Net Sales & Operating 3 067 3,067 3 778 3,778 23 Revenue EBIT 714 976 37 16
Slide 17: Copper: Business Conditions & Performance Review
Copper: Business Conditions & Performance Review 17
Slide 18: 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 19: Custom Smelters: Low TCRC, Rising energy costs
Custom Smelters : Low TCRC, Rising energy costs … Structural shortages likely to … Rising energy costs continue ((Mn Ton)) Mine Supply Smelter Demand 13.7 13.2 13.1 13 0 13.0 13.0 % change H1FY11 12.8 Input Vs HiFY10 12.4 12.5 12.3 12.2 Imported >10 coal Furnace oil >20 Propane >25 2007 2008 2009 20
Slide 20: Cu: Production Performance
Cu: Production Performance Q2: Record cathode production and sharp jump in Own CCR production C th d (kt) Cathode O Own CCR(kt) 5% 41% 94 43 90 31 Q2 FY10 Q2 FY11 Q2 FY10 Q2 FY11 St Strong operational ti l performance f 20
Slide 21: Copper Business: Financial Performance
Copper Business: Financial Performance Q2 FY10 Q2 FY11 Change (%) (` cr) Net Sales & Operating 3 268 3,268 3 951 3,951 21 Revenue EBIT 217 129 (41) H1 FY10 H1 FY11 Change (%) (` cr) Net Sales & Operating 5,748 7,265 26 Revenue EBIT 374 253 (32) 21
Slide 22: Mining: ABML Highlights
Mining : ABML Highlights Nifty Sulfide Production (tons) Nifty EBIDTA (A$ mn) 29491 11% 18% 89.7 26488 75 7 75.7 FY10 H1 FY11 H1 FY10 H1 FY11 H1 Strong Performance 22
Slide 23: Copper business – Strategic initiatives paying off
Copper business – Strategic initiatives paying off III Key focus areas Drivers 9 Cost effective brown field expansion 1 Capital Efficiency 9 Strategic advantage through technology 9 Asset sweating Leadership in domestic 9 Service level differentiation 2 market offering better realisation 9 Quality e
Slide 24: Projects – An Update
rill ADITYA BIRLA Projects — An Update
Slide 25: Utkal Alumina
Utkal Alumina Engineering Basic Engg-100 % Complete, Detailed Engg- 95% Completed, not on critical path Statutory Obtained Clearances Commitment Over 82% g Site Progress More than 7,000 ppeople p working g at site. Major Contractors like L & T, Simplex, GDC mobilized fully at site. 94% of Piling wor
Slide 26: Activity at Site: Utkal
Activity at Site: Utkal Evaporation area: Erection of equipment Mud Washing: erection of DCW under progress under progress BTG Package: g ESP#1: Hooper p erection under progress p g BTG Package: Boiler#1: Insulator erection 26
Slide 27: Mahan Aluminium
Mahan Aluminium Engineering Basic Engineering - 94% Complete, Detailed Engineering-60% Complete Statutory All Major approvals in place. pp approvals Orders Orders for all major, long delivery equipment placed. Commitment Around 83% Around 12,000 people at site. Major Contractors like L & T, BHEL, Ro
Slide 28: Activity at Site: Mahan smelter
Activity at Site: Mahan smelter Pot Room Cathode sealing shop GTC1 ID Fan GTC1 BBag filt filter & foundations & Stack crust bath silo support structure erection 28
Slide 29: Activity at Site: Mahan CPP
Activity at Site: Mahan CPP Erection work in Boiler #2 Chimney #4 - Assembly of Slip form Erection of Boiler Reinforcement & Shuttering work for TG#2 #2 columns Deck slab 29
Slide 30: Aditya Smelter
Aditya Smelter Engineering Detailed Engg- Engg 68% Complete Statutory Major approvals received. Forest land stage I clearance approvals received. Permission to start project site consolidation activities received Stage II clearance awaited received. awaited. Commitment Around 66%. Major orders place
Slide 31: Activity at Site: Aditya Smelter and CPP
Activity at Site: Aditya Smelter and CPP Pot Room Foundation 220 KV switch yard Intake well with substation Boiler foundation 31
Slide 32: Hirakud Smelter and Power Plant Expansion
Hirakud Smelter and Power Plant Expansion Smelter Capacity increase from 161 to 213 ktpa thru’ addition of 80 Pots of 235 kA Expansion Power Pl P Plantt C Capacity it tto increase i tto 467.5 467 5 MW by b Addition Additi off 100 MW MW. Expansion Schedule 30 pots to be commissioned by Dec’2011 & bal
Slide 33: Project Blue Fox
Project Blue Fox Scope Brownfield project – Can Body Stock at Hirakud Dismantling Dismantling completed. All containers received at Vizag port - and receipt of 13000 MT. q p equipments Cold Mill Order placed on Achenbach. Order placed on ABB for refurbishment of Main Motors Motors. Work Hot Mill pro
Slide 34: Jharkhand Smelter
Jharkhand Smelter Land Total land requirement of ~4000 acres for the project. Both private as well as Govt land acquisition started started. Water Water drawl clearance received for 55 MCM. Environmental Application to be submitted after sizeable quantity of land has clearance been acquired. Feasibi
Slide 35: Aditya Refinery
Aditya Refinery Land Majority land acquired, Rest process on track Water Water drawl agreement in place M/s Simplex Infrastructure Ltd is awarded with the job for supply & erection of water drawl arrangement. They have completed the ground survey work for route alignment for 15 Km. Forest Terms of R
Slide 36: Towards Sustainable Leadership
Towards Sustainable Leadership Domestic operations Expansion Projects Novelis User industries of aluminum Greenfield projects expected Improving product mix to have a bullish outlook to be in global best quartile drive margins and growth Robust sector fundamentals for manufacturing costs S
Slide 37: 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 38: Thank you
Th k you Thank 38