Hindalco Industries Limited · NSE:HINDALCO
Hindalco Industries — Q3 FY09 Earnings Presentation
39 slides from Hindalco Industries's earnings presentation, Jan 30, 2009
Slide 1: Hindalco Industries Limited Performance Review Q3 FY09
Hindalco Industries Limited Performance Review Q3 FY09 Investor Presentation 30th January 2009 1
Slide 2: Backdrop: Financial Crisis & Global Meltdown
Backdrop: Financial Crisis & Global Meltdown As the Financial crisis spread through the Globe…. The financial system witnessed severe liquidity crunch Banks lost trust in the peers Stock markets collapsed as funds felt redemption pressure Suddenly Fear & uncertainty engulfed till then vibran
Slide 3: Demand slow down led to a crash in commodities: Aluminium
Demand slow down led to a crash in commodities …… Aluminium Slowing Global demand… ….Resulted in stock buildup & price collapse Mn Tonnes Tonnes $/Tonne 40 3,800 0.8% 38.1 37.8 3,341 2,500,000 3,300 10% LME CSP-$/Mt -56% 2,800 2,000,000 34.4 2,300 35 1,500,000 Exchange Stock= Comex+LME+Shanghai 1,80
Slide 4: Demand slow down led to a crash in commodities: Copper
Demand slow down led to a crash in commodities …… Copper Slowing Global demand… ….Resulted in stock buildup & price collapse 18.0 0.6% 18050Mn Tonnes Tonnes $/Tonne 18000 17.9 17950 450,000 10000 17900 400,000 9000 17850 8000 17800 350,000 17750 2.7% 300,000 7000 17700 6000 17650 250,000 -55% 17600
Slide 5: Key Industry Drivers
Key Industry Drivers Change Driver Q3 FY08 Q3 FY09 Impact % Aluminium LME 2,443 1,821 (25%) Average($/ton) Copper LME 7,239 3,940 (46%) Average ($/ton) Exchange 39.5 48.8 24% Rate(Rs/$) Domestic Al Ingot Realisation 1,03,137 97,142 (6%) (Rs/ton) 5
Slide 6: Financials
Financials: Q3 FY08 Q3 FY09 Change 9M FY08 9M FY09 Change Rs Crores (%) (%) Net Sales 4,539 4117 -9% 14,191 14,448 2% EBIDTA 801 779 -3% 2,604 2,722 5% PBT 706 675 -4% 2,335 2,532 8% PAT 543 545 0% 1,784 1,962 10% EPS 4.01 3.37 -16% 14.1 13.61 -4% Number of shares: 170.05 Cr in Q3 FY09 122.57 Cr in
Slide 7: Hindalco Highlights
Hindalco Highlights… Hindalco’s robust business model kept it in relatively good stead Copper business acted as a natural hedge against the vagaries of commodity cycle Underlines the importance of conversion business model The role Novelis is expected to play in the long term Copper business per
Slide 8: Aluminium Business Performance
Aluminium Business Performance 8
Slide 9: Backdrop: All-round drop in Aluminium demand
Backdrop: All-round drop in Aluminium demand De-growth in Sheet & Plate consumption Chinese demand -Plummeted in USA and Canada 14 Consumption (Mn T) 45% (Kt) Growth% 12.5 12 40% 1200 12 38.40% 35% 1150 1131 1140 1130 10 8.67 30% 1100 8 25% 7.1 1050 22.10% 6 20% 18.70% 1000 15% 959 957 4 950 10% 2 9
Slide 10: Supply: At Current Prices, >90% of Smelters are unviable
Supply: At Current Prices, > 90% of the Smelters are unviable Production cuts Production cuts By Region 6000 Announcement By Month (Mn Tonnes) 5020 Aug'08 Prodn- Announced 679 Country annualised Curtailment %Curtailed 5000 China 14.0 3.0 21% (Kt) 920 North America 5.7 0.8 15% 4000 Eastern Europe/Rus
Slide 11: Aluminium: Performance at a glance
Aluminium: Performance at a glance Q3 FY08 Q3 FY09 Change Rs Crores (%) Net Sales & 1736 1980 14% Operating Revenue EBIT 578 530 -8% 11
Slide 12: Higher Sales of Specialty Alumina
Higher Sales of Specialty Alumina (Mt) 250000 Standard Specials 197149 193987* 200000 +6% 150000 102050 108185 100000 -10% 50000 95099 85802 0 9M FY08 9M FY09 * Overall sales declined due to higher captive consumption 12
Slide 13: Increase in Production volumes
Increase in Production volumes Alumina (Hydrate) Aluminium 330000 140000 Tonnes Tonnes 135096 319074 320000 10.7% 130000 4.6% 310000 122026 305123 120000 300000 290000 110000 Q3 FY08 Q3 FY09 Q3 FY08 Q3 FY09 13
Slide 14: Peer Comparison: Hindalco - Creditable performance
Peer Comparison: Hindalco - Creditable performance How the players performed vis vis corresponding quarter last year EBIT Margins for the current quarter 125 EBIT - Indexed: Q3FY08=100 100 % 28 75 23 50 18 25 0 13 -25 Global Global Global Global Hindalco Peer 1 Peer2 Peer3 Peer4 8 -50 3 -75 -100 -2
Slide 15: Copper Business Performance
Copper Business Performance 15
Slide 16: Challenging Times
Challenging Times TC/RC down by 33% vis-a- vis Q3FY08 Sharp decline in demand of refined copper globally Sharp fall in By-product prices 16
Slide 17: Declining Demand
Declining Demand Global demand – Moderate Decline Global demand for refined copper set to 18.2 Consumption (Mn T) 10% Growth% 18.16 decline in 2009 due to apparent Global 18.15 (Mn T) 18.1 recession 18.03 18.05 0.60% 18 1.30% 0% -0.50% Global slowdown in Copper intensive 17.95 17.94 17.9 sectors
Slide 18: High Cost Smelters Cutting down production
High Cost Smelters Cutting down production as by-product credit dries up (Kt) Production cut Announcement 250 213 Total 200 Estimated Production Production Particular production in Cut (%) Cut (kt) 150 2009 (kt) US 640 -25.0% 213 Kt Indonesia 700 -10.0% 78 100 78 Japan 3591 -6.3% 226 70 49 58 63 35
Slide 19: Impressive Performance in challenging times
Impressive Performance in challenging times Production performance vis a vis Q3 FY 08…… Improved efficiency & lower conversion cost On the back of bi-annual shutdown in smelter III, Output declined by 12% Highest ever smelter output in Dec’08 Cathode production declined by 7% However, Value
Slide 20: Copper: Performance at a glance
Copper: Performance at a glance Q3 FY08 Q3 FY09 Change Rs Crores (%) Net Sales & 2,806 2,139 (24%) Operating Revenue EBIT 94 116 23% 20
Slide 21: Projects
Projects eee io 21
Slide 22: HAAL
HAAL Project commissioned during Q3 FY09 Value accretive project with enormous potential Commercial production started in December 1060 MM Dia billet cast on 6th of Dec 2008 (Largest Aluminium alloy billet ever produced in India) First shipment dispatched to local forging units. Exports
Slide 23: Muri Alumina Expansion
Muri Alumina Expansion Statutory Clearances – Obtained Project – Commissioned; under stabilization Commissioning: Bauxite Handling & Bauxite Grinding- - commissioned. HT Digestion and Precipitators commissioned. Railway network operational. Overall plant commissioned & stabilization under prog
Slide 24: Muri Project Site
Muri Project Site Bauxite Handling HT digesters New 10,000 T Alumina silo New tracks & BTAP wagons 24
Slide 25: Hirakud Smelter and Power Plant Expansion
Hirakud Smelter and Power Plant Expansion Phase II of the expansion of the smelting capacity from 100,000 TPA to 143,000 TPA was completed in Aug – 08 , as per schedule Further work on expansion to 155 KTA is in progress and is expected to be completed by Aug- 09. First group of pots mechanically co
Slide 26: Greenfield Projects – Mahan Aluminium
Greenfield Projects – Mahan Aluminium Land: Section 9(1) letter issued to 1 of 4 villages by Dist authorities. Balance villages in process. Coal: Coal block allotted. Production of Coal likely to start in FY 10 Environmental, Rail & Water clearances have been obtained. Land for compensatory af
Slide 27: Greenfield Project – Utkal Alumina
Greenfield Project – Utkal Alumina Detail engineering for the main plant area is substantially completed. All necessary statutory approvals are in place for construction of Project Team is in place for the execution of project About Rs. 750 crores have already been spent, Commitment made for about R
Slide 28: Utkal Alumina
Utkal Alumina CPP area: Piling work commenced in boiler Township: Civil foundations work under and coal bunker area (M/s Rammana Rao & progress (M/s Gulf Oil) associates CPP area: Civil foundations work under progress in power plant area (M/s GDCL) 28
Slide 29: Greenfield Projects – Aditya Smelter & CPP
Greenfield Projects – Aditya Smelter & CPP Technology agreement with AP signed for Smelter. SIA clearance received. Basic Engineering is 70% complete, received on time. Detailed engineering consultant EIL- for smelter & DCPL for CPP. Work is in progress Major proprietary equipments for smelt
Slide 30: Greenfield Projects – Aditya Refinery & mines
Greenfield Projects – Aditya Refinery & mines. Alumina Technology tie up with ALCAN signed. SIA clearance for Alumina Technology received. Land acquisition is at an advance stage. EPCM for Co-Gen plant awarded to M/s M N Dastur & Co. Construction & Operation power : Work is going on as per p
Slide 31: Jharkhand Aluminium
Jharkhand Aluminium Land Acquisition: 7000 acres of land earmarked till date and Topographic and Demographic survey completed. Socio-economic survey is started now. CSR activities are ramped up. Visit of Sonahatu people to Renukoot complex was done. This was extremely fruitful and positive. Tu
Slide 32: To Sum Up: Difficult times
To Sum Up……. ‘ Difficult times’ Financial Market turmoil has reversed the commodity bull run Demand destruction, pricing pressures poses a serious & continuous challenge Hindalco’s robust integrated model has helped in partially offsetting the impact of sharp fall in the commodity prices Cop
Slide 33: Financials
Financials eee io 33
Slide 34: Results
Results Q3 FY08 Q3 FY09 9M FY08 9M FY09 Change Rs Crores Change (%) (%) Net Sales 4,539 4,117 -9% 14,191 14,448 2% Expenditure 3,738 3,338 -11% 11,586 11,726 1% Other Income 114 150 32% 349 542 55% PBDIT 915 930 2% 2,953 3,264 11% Depreciation 147 161 10% 436 477 9% PBIT 768 769 0% 2,517 2,786 11% I
Slide 35: Segment Results
Segment Results CE 58% 42% Net Sales 48% 52% EBIT 82% 18% Aluminium Copper 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 Change Change Rs Crores Aluminium Copper (%) (%) Q3 FY08 Q3 FY09 Q3 FY08 Q3 FY09 Net Sales 1,736 1,980 14% 2,806 2,139 -24% EBIT 578 530 -8% 94 116 23% EBIT Margins 33% 27% 3% 5% Capita
Slide 36: Aluminium Production
Aluminium Production Production Unit Q3 FY08 Q3 FY09 % Chg 9M FY08 9M FY09 % Chg Alumina MT 304,059 319,074 5% 888,781 918,959 3% Metal MT 121,971 135,073 11% 356,397 390,274 10% 36
Slide 37: Copper Production
Copper Production Production Unit Q3 FY08 Q3 FY09 % chg 9M FY08 9M FY09 % chg Copper Cathodes MT 78,334 72,877 -7% 236,748 210,851 -11% CC Rods MT 34,471 39,737 15% 103,901 104,195 0% 37
Slide 38: Aluminium Sales Revenue (Rs Crs)
Aluminium Sales Revenue (Rs Crs) Product Q3 FY08 Q3 FY09 % Chg 9M FY08 9M FY09 % Chg Chemicals 131 138 5% 441 494 12% Primaries 612 1,025 67% 1,834 2,646 44% 38
Slide 39: Copper Sales Revenue (Rs Crs)
Copper Sales Revenue (Rs Crs) Product Q3 FY08 Q3 FY09 % chg 9M FY08 9M FY09 % chg Copper Cathodes 1,402 717 -49% 4,462 3,530 -21% CC Rods 1,072 1,019 -5% 3,453 3,366 -3% 39