Hindalco reports consolidated Q1FY20 results

09 August 2019
Stable operational performance amid challenging conditions

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Key highlights of Q1 FY20 (vs. Q1 FY19):

  • Record Novelis Adjusted EBITDA at $372* million, up 11 per cent
  • Record Novelis Adjusted EBITDA per ton at $448*, up 7 per cent
  • Novelis Net Income (excluding special items1) at $145* million (vs. $115 million*) up 26 per cent
  • Aluminium Metal Sales at Hindalco, up 7 per cent at 320 Kt (vs. 300 Kt)
  • Record quarterly Copper Continuous Cast Rod (CCR) production at 66 Kt (vs. 65 Kt), up 2 per cent
  • Consolidated EBITDA at Rs.3,769 crore (vs. Rs.4,334 crore), down 13 per cent
  • Consolidated PAT at Rs.1,063 crore (vs. Rs.1,475 crore), lower by 28 per cent
  • Strong Balance Sheet with consolidated net debt to EBITDA at 2.69x at the end of June 2019 (2.48x as on 31 March 2019)

*As per US GAAP
1 Tax-effected special items include restructuring and impairment, metal price lag, gain/loss on assets held for sale, loss on extinguishment of debt, loss/gain on sale of business.

Mumbai, Aug 09, 2019 – Hindalco Industries Ltd., a global leader in aluminium and copper, today announced consolidated results for the first quarter ended 30 June 2019. While profits were impacted by the global downturn and lower commodity prices, Hindalco held its ground and delivered a steady performance. Novelis led from the front to achieve record quarterly results, and the Indian businesses put up a resilient show amid subdued economic conditions.

Consolidated Financial Highlights for the Quarter ended 30 June 2019

Particulars (Rs. crore)
Q1 FY19 Q4 FY19 Q1 FY20
Revenue from Operations 31,078 33,746 29,972
Earning Before Interest, Tax, Depreciation & Amortisation (EBITDA)      
Aluminium (including Utkal) 1,532 1,057 889
Copper 347 325 267
Novelis* 2,416 2,228 2,538
All Other Segments (19) (34) (14)
Unallocable Income/ (Expense) (Net) 58 361 88
Total EBITDA 4,334 3,938 3,769
Finance Costs 913 975 957
PBDT 3,421 2,962 2,812
Depreciation (including impairment) 1,147 1,236 1,235
PBT before Exceptional Items and Tax 2,274 1,726 1,577
Share in Profit/ (Loss) in Equity Accounted Investments (Net of Tax) 1 (1) 1
Exceptional Income/ (Expenses) (Net) - - (22)
Profit Before Tax (After Exceptional Item) 2,275 1,725 1,556
Profit/ (Loss) After Tax 1,475 1,178 1,063
* As per Ind-AS

Business Highlights – Q1 FY20

Novelis delivered yet another strong operational and financial quarterly performance. Adjusted EBITDA grew 11 per cent to touch a record high of $372 million in Q1 FY20. This performance was driven by higher shipments coupled with favourable price and product mix, partially offset by less favourable recycling benefits due to lower aluminium prices. Novelis achieved its best-ever Adjusted EBITDA per ton of $448 in Q1 FY20, up 7 per cent YoY. The company recorded its best-ever net income (excluding tax-effected special items1) of $145 million in Q1 FY20, up 26 per cent YoY. Total shipments of flat rolled products (FRP) in Q1 FY20 grew 4 per cent to 830 Kt. The revenues were at $2.9 billion in Q1 FY20, down 6 per cent YoY; this decline was mainly due to a fall in average base aluminium price, partially offset by higher total shipments and a favourable product price and mix.

Aluminium (Hindalco including Utkal Alumina)
Stable operations of the Indian Aluminium Business helped achieve Alumina (including Utkal) and Aluminium metal production of 686 Kt and 326 Kt respectively, in Q1 FY20. Reported revenue of Rs.5,472 crore in Q1 FY20 (Rs.5,668 crore a year ago) was lower by 3 per cent due to lower realisations. EBITDA stood at Rs.889 crore in Q1 FY20 compared to Rs.1,532 crore in Q1 FY19 due to lower realisations. EBITDA margins were at 16 per cent in Q1 FY20. Production of Aluminium Value Added Products (VAPs), excluding wire rods, was at 79 Kt in Q1 FY20 vs. 78 Kt in Q1 FY19. The impact of the Muri Alumina refinery closure was partially offset by higher volumes at Utkal Alumina.

The Copper Business recorded its highest quarterly Value Added Product (VAP) production at 66 Kt in Q1 FY20, up 2 per cent YoY. The VAP sales were up 3 per cent at 63 Kt in the first quarter. The overall production volumes (Copper Cathodes) were at 76 Kt in Q1 FY20, lower compared to the prior year, due to planned maintenance shutdown. The total copper metal sales remained steady at 82 Kt in Q1 FY20 vis-à-vis Q1 FY19. Revenue from the Copper Business was at Rs.4,593 crore in Q1 FY20 vs. Rs.5,012 crore a year ago. EBITDA was lower at Rs.267 crore in Q1 FY20 compared to Rs.347 crore in Q1 FY19, due to lower by-product volumes and realisations.

Consolidated results
Hindalco’s Consolidated Revenue for Q1 FY20 stood at Rs.29,972 crore compared to Rs.31,078 crore in the previous year. EBITDA was at Rs.3,769 crore in Q1 FY20 vs. Rs.4,334 crore a year ago. Consolidated Profit before Tax (and Before Exceptional Items) was at Rs.1,578 crore in Q1 FY20 compared to Rs.2,275 crore in the prior year. Profit After Tax was at Rs.1,063 crore in Q1 FY20 compared to Rs.1,475 crore in the corresponding quarter last year. Long-term Loans remained unchanged from end-FY19, with consolidated net debt to EBITDA at 2.69x as on 30 June 2019.

Key initiatives and project updates – Q1 FY20

  • All the organic expansion projects for Novelis in US, China and Brazil are progressing on time and on budget.
  • The digital transformation at Novelis is underway to further drive its world-class manufacturing operations across all regions. The digital transformation at Hindalco is also making good ground.
  • Hindalco has taken significant steps to further reduce emissions and increase use of clean energy. A 30 MW solar power plant has been commissioned in Aditya Aluminium, Odisha and additional solar projects have been initiated.
  • All regulatory approvals for the Aleris acquisition continue to progress and are expected to close in Q3 FY20.
  • Utkal Alumina’s brownfield capacity expansion of 500 Kt is on track and is expected to be operational by mid FY21.

Commenting on the results, Satish Pai, Managing Director, Hindalco Industries, said, “We continued to maintain our strong position in aluminium and copper in Q1 FY20 despite headwinds. The resilient performance owes as much to our backward integration, resource security, strong balance sheet, operational capabilities and rich product portfolio. Today, 79 per cent of Hindalco’s consolidated EBITDA is non-LME linked, reflecting a balanced and sustainable business model, which will serve us well in all market conditions.”

About Hindalco Industries Limited
Hindalco Industries Limited, is the metals flagship company of the Aditya Birla Group. A US$ 18.7 billion metals powerhouse, Hindalco is the world’s largest aluminium rolling and recycling company, and a major copper player. 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 37 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.