Hindalco reports Consolidated Q1FY21 Results

14 August 2020

Steady operational performance and diversified product portfolio help mitigate the impact of COVID-19

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Key Highlights of Q1FY21 (vs Q1 FY20)

  • Steady Aluminium India metal sales at 303 Kt (vs 320 Kt)
  • Sustained Aluminium India Business EBITDA at Rs.856 crore (vs Rs.853 crore)
  • An industry-best EBITDA margin of 19.3%, up 380 bps in Aluminium India Business
  • Achieved record automotive shipments in Asia in Novelis
  • Novelis Adjusted EBITDA2 at $253* million; Adjusted EBITDA per ton2 at $327*
  • Completed acquisition of Aleris on April 14 and began integration to drive synergies
  • Consolidated Business EBITDA at Rs. 2,813 crore (vs Rs.3,730 crore)
  • Consolidated PAT for continuing businesses before tax-effected exceptional3 and special items1 at .139 crore (vs Rs.1,189 crore)

MUMBAI, August 14, 2020: Hindalco Industries Limited, a global leader in aluminium and copper, today announced consolidated results for the quarter ended June 30, 2020.The Company reported steady quarterly results, driven by a strong performance by India Aluminium Business, supported by lower input costs, stability in operations, and cost-saving actions.

After four consecutive years of record earnings, Novelis reported a net income (excluding tax-effected items) of $22 million in Q1FY21. While Novelis’ financial results were impacted by the COVID-19 pandemic, its performance was steadied by beverage can market resiliency and encouraged by the upward monthly demand trend in the automotive and specialty markets.

*As per US GAAP
1Tax-effected special items includes purchase price accounting adjustments, restructuring & impairment costs, metal price lag, charitable donations and business acquisition & integration costs in Novelis.
2Q1 FY21 numbers include Aleris.
3Adjusted for post-tax impact of exceptional item of ex-gratia paid to employees for their contribution during COVID-19 pandemic in India.

Consolidated Financial Highlights for the Quarter ended 30 June 2019

Particulars (Rs. crore)
Q1 FY20 Q4 FY20 Q1 FY21
Revenue from Operations 29,972 29,318 25,283
Earning Before Interest, Tax, Depreciation & Amortisation (EBITDA)      
Novelis* 2,587 2,773 1,919
Aluminium 853 1,043 856
Copper 307 406 37
All Other Segments (17) (6) 1
Business EBITDA 3,730 4,216 2,813
Unallocable Income/ (Expense) - (Net) & GAAP Adjustments 39 (43) (454)
EBITDA 3,769 4,173 2,359
Finance Costs 957 1,429 992
PBDT 2,812 2,744 1,367
Depreciation & Amortisation (including impairment) 1,235 1,349 1,551
Share in Profit/ (Loss) in Equity Accounted Investments (Net of Tax) 1 - 3
PBT before Exceptional Items and Tax 1,578 1,395 (181)
Exceptional Income/ (Expenses) (Net) (22) - (419)
Profit Before Tax (After Exceptional Item) 1,556 1,395 (600)
Tax 493 727 (31)
Profit/ (Loss) from Continuing Operations 1,063 668 (569)
Profit/ (Loss) from Discontinued Operations - - (140)
Profit/ (Loss) After Tax 1,063 668 (709)
*As per US GAAP; Q1 FY21 Hindalco consolidated financials include Aleris

Commenting on the results, Mr. Satish Pai, Managing Director, Hindalco Industries Ltd., said, “I am pleased at our ability to forge ahead despite the weak post-COVID market scenario. All our Aluminium India smelters operated at more than 90% capacity during the lockdown. We maintained our sales volumes, with exports accounting for nearly 80% of sales. This performance led to our Indian Aluminium Business recording an industry-high EBITDA margin.

Novelis also delivered an industry-high EBITDA per ton, amidst a challenging business environment, partly due to strong contribution by Aleris. Novelis’ automotive customers across regions are trending upwards, towards reaching pre-pandemic production levels, with record automotive shipments in China. We are seeing green shoots both in domestic and international markets and we are ready to handle the rise in demand.”

Business segment performance in Q1FY21 (vs. Q1FY20)

Novelis (including Aleris).
Novelis recorded a quarterly adjusted EBITDA of $253 million in Q1 FY21 vs $372 million, and an Adjusted EBITDA per ton of $327 vs $448/ton in the year-ago quarter. This was impacted by lower shipments and unfavourable product mix, but partially offset by good cost control and EBITDA contribution from the acquired Aleris business. Novelis reported a Net Income (excluding tax-effected special items1) of $22 million in Q1FY21 vs $145 million. Revenue was at $2.4 billion in Q1FY21 (vs $2.9 billion). Total shipments of flat rolled products (FRPs), at 774 Kt in Q1FY21 (vs 830Kt), were impacted by subdued market conditions on account of COVID.

Aluminium (India)
EBITDA stood at Rs.856 crore in Q1FY21, compared with Rs.853 crore for the same quarter last year. The EBITDA was maintained despite macro uncertainties amid COVID-19. The EBITDA margin of 19.3% was one of the best in the industry. All smelters and major refineries continued to operate during the lockdown. Reported revenue of ?4,436 crore in Q1FY21 vs Rs.5,490 crore in Q1FY20, was down 19% due to lower aluminium prices. With smelter utilisation at 90% in Q1FY21, Indian Aluminium Business achieved aluminium metal production of 291 Kt (vs 326 Kt). Aluminium metal sales were at 303 Kt in Q1FY21, down 5% year-on-year, due to the impact of the subdued domestic market, which was offset by higher exports. Enhanced thrust on fixed cost reduction, better operational efficiencies and lower input costs led to a reduction in cost of production of aluminium metal in Q1 FY21. Aluminium VAP (excluding wire rods) sales volumes in the first quarter were at 35 Kt vs 77 Kt same quarter last year, down 55%, due to subdued market conditions.

Copper cathode production in Q1FY21 was impacted by disruptions in operations due to COVID-19, leading to lower production at 41 Kt, down 46%. Total copper metal sales were lower by 29%, at 58 Kt, and Copper Value Added Product (CC Rods) sales were down 51% at 31Kt, impacted by lower domestic demand. However, cathode exports in Q1FY21 were higher at 25Kt. DAP (fertiliser) sales volume was up 230% driven by robust demand in Q1FY21.The higher volumes were met through imports as the DAP plant was under planned maintenance shutdown. EBITDA in Q1FY21 was Rs.37 crore compared to Rs. 307 crore in the corresponding quarter last year. Revenue from the Copper Business stood at Rs.3,031 crore in the first quarter compared to Rs. 4,593 crore in the same quarter last year, lower by 34%, due to lower volumes and realisation, both of copper and by-products.

Consolidated Business EBITDA was at Rs.2,813 crore in Q1FY21 (vs Rs. 3,730 crore). Consolidated Revenue for the first quarter of FY21 stood at Rs. 25,283 crore (vs Rs. 29,972 crore). PBT for continuing operations before exceptional and special items1 was Rs.274 crore (vs Rs.1,718 crore), PAT for continuing operations before tax-effected exceptional3 and special items1 was Rs.139 crore (vs Rs.1,189 crore). The consolidated net debt to EBITDA ratio was 3.83x on June 30, 2020, vs 2.61x on March 31, 2020.

COVID-19 Update
Hindalco has been mitigating the impact of the pandemic through planned initiatives, along with strict precautionary actions to protect its people and operations.
All the aluminium smelters and major refineries operated at near full-scale. Its downstream plants operated at optimal capacity to meet existing market demand. The Indian aluminium operations exported nearly 80% of its production and maintained its sales volumes. To keep its cash position strong against market volatility, the Company implemented various cost-saving measures by optimizing expenditure.

When lockdown restrictions started easing in phases, Hindalco exercised utmost caution and continued to operate its plants with minimal staff and stringent safety measures in place.

Early in the quarter, Novelis had had to temporarily shut down some of its facilities to align with customer demand and reduce operating costs. However, as many customers resumed production in May, Novelis was able to safely and reliably ramp back production to meet increasing order levels. Today, all of its plants are operational and many are running at almost full capacity utilization.

Business Updates

  • Novelis completed the acquisition of Aleris on April 14, 2020, and the integration process has begun. Divestment procedures for automotive assets in Lewisport in the U.S. and Duffel in Europe are underway.
  • The expansion in Brazil to support Novelis’ beverage can business continues to progress with commissioning expected in FY22.
  • Novelis’ Automotive finishing line expansion at Guthrie, Kentucky, expected to commission in early FY22.
  • With demand from Automotive Customers in China at near pre-COVID levels, Novelis re-started the final commissioning phase of the Changzhou, China, expansion, targeting customer qualification in Q3FY21.
  • Utkal Alumina’s capacity expansion of 500 Kt is expected to be commissioned in Q4FY21.

About Hindalco Industries Limited
Hindalco Industries Limited is the metals flagship company of the Aditya Birla Group. A $16.7 billion metals powerhouse, Hindalco is the world’s largest aluminium rolling and recycling company, and a major player in copper. It is also one of Asia’s largest producers of primary aluminium. Guided by its purpose of building a greener, stronger, smarter world, Hindalco provides innovative solutions for a sustainable planet. Its wholly-owned subsidiary Novelis Inc. is the world’s largest producer of aluminium beverage can stock and the largest recycler of used beverage cans (UBCs). Hindalco’s copper facility in India comprises a world-class copper smelter, downstream facilities, a fertiliser plant and a captive jetty. The copper smelter is among the world’s largest custom smelters at a single location. Hindalco’s global footprint spans 47 manufacturing units across 10 countries.

Registered Office:
Ahura Centre, 1st Floor,
B Wing, Mahakali Caves Road
Andheri (East),
Mumbai 400 093
E mail: hindalco@adityabirla.com
Corporate Identity No. L27020MH1958PLC011238

Disclaimer: Statements in this “Media Release” describing the company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company assume no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.