Hindalco reports consolidated Q3 FY20 results

12 February, 2020

Hindalco-Novelis demonstrate stability in the midst of unpredictable market conditions

Key Highlights of Q3 FY20 (vs. Q3 FY19)

  • Record Q3 Novelis Adjusted EBITDA at US$343* million, up 7 per cent year-on-year
  • Novelis Adjusted EBITDA at US$430* per ton, up 7 per cent year-on-year
  • Novelis Net Income (excluding tax-effected special items1) at US$132* million, up 31 per cent year-on-year
  • Novelis successfully issued US$1.6 billion Bonds at 4.75 per cent due in 2030; extends debt maturity profile at attractive rates
  • Hindalco Aluminium (including Utkal Alumina) EBITDA margin at a healthy 19 per cent
  • Consolidated Finance Cost at Rs.889 crore, lower by 4 per cent, due to reduction in interest rates
  • Consolidated EBITDA at Rs.3,676 crore, down 10 per cent
  • Consolidated PAT stood at Rs.1,062 crore (vs. Rs.1,394 crore), down 24 per cent
  • Consolidated Net Debt to EBITDA at 2.65x as on 31 December 2019 (vs. 2.48x as on 31 March 2019)

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

Mumbai: Hindalco Industries Limited, a global leader in aluminium and copper, today announced consolidated results for the third quarter ended 31 December 2019. In spite of subdued economic conditions, the company delivered steady quarterly results on the back of strong performance by Novelis, lower input costs and stable operations of the Indian businesses.

Consolidated financial highlights for the quarter and nine months ended december 31, 2019

Rs. crore
Particulars Q3 FY19 Q2 FY20 Q3 FY20 9M FY19 9M FY20
Revenue from Operations 33,213 29,657 29,197 96,797 88,826
Earning Before Interest, Tax, Depreciation & Amortisation (EBITDA)          
- Novelis* 2,324 2,629 2,446 7,048 7,662
- Aluminium# 1,252 806 1,036 4,086 2,690
- Copper 490 306 256 1,310 870
- All Other Segments (21) 5 (6) (42) (15)
- Unallocable Income/ (Expense) - (Net) & GAAP Adjustments 35 172 (56) 287 156
Total EBITDA 4,080 3,918 3,676 12,689 11,363
Finance Costs 929 922 889 2,803 2,768
PBDT 3,151 2,996 2,787 9,886 8,595
Depreciation & Amortisation (including impairment) 1,221 1,249 1,302 3,530 3,786
Share in Profit/ (Loss) in Equity Accounted Investments (Net of Tax) 1 1 2 2 4
PBT before Exceptional Items and Tax 1,931 1,748 1,487 6,358 4,813
Exceptional Income/ (Expenses) (Net) - (256) (6) - (284)
Profit Before Tax (After Exceptional Item) 1,931 1,492 1,481 6,358 4,529
Profit/ (Loss) After Tax 1,394 974 1,062 4,317 3,099

*As per US GAAP
# Q3 FY20 EBITDA includes savings of Rs. 43 crore on account of regulatory changes related to Renewable Power Obligations (RPO) and Rs. 72 crore on account of reversal of provision of such regulatory changes for the first half of FY20.

Novelis

Novelis delivered a continued strong operational and financial performance in Q3 FY20. Total shipments of flat rolled products (FRPs) were at 797 Kt, which is flat year-on-year. Beverage can sheet and automotive body sheet shipments, however, were higher by 4 per cent and 3 per cent respectively, driven by growing consumer preference for sustainable packaging and light-weight vehicles. Novelis recorded its highest Q3 EBITDA of US$343 million, a growth of 7 per cent over the prior year. Adjusted EBITDA per ton was US$ 430 in Q3 FY20, up 7 per cent year-on-year. Novelis reported a net income (excluding tax-effected special items) of US$132 million in Q3 FY20, an increase of 31 per cent over Q3 FY19. Revenue was down 10 per cent year-on-year at US$2.7 billion in Q3 FY20, mainly due to a decline in average base aluminium prices and local market premiums, partly offset by favourable recycling benefits.

Aluminium (Hindalco including Utkal Alumina)

Reported revenue of Rs.5,467 crore in Q3 FY20 (Rs.6,019 crore a year ago) was down 9 per cent, due to lower realisations. EBITDA stood at Rs.1,036# crore in Q3 FY20, compared to Rs.1,252 crore in Q3 FY19. Stable operations in the Indian Aluminium Business helped achieve Alumina (including Utkal) and Aluminium metal production of 662 Kt and 330 Kt respectively in Q3 FY20. Aluminium Metal sales volume grew 2 per cent to 328 kt in Q3 FY 20. Aluminium VAP (excluding wire rods) volumes remained flat year-on-year, at 75 kt.

Copper

Overall production volumes (Copper Cathodes) were down 18 per cent year-on-year to 86 Kt in Q3 FY20, compared to the prior year. The Copper Business’ Value Added Product (VAP) production was at 60 Kt, lower by 8 per cent year-on-year. Total VAP sales were up 3 per cent at 58 Kt in Q3 FY20, which is in line with market growth. Total copper metal sales were lower by 14 per cent, at 84 Kt in Q3 FY20, versus 99 kt in Q3 FY19 on account of lower production. Revenue from the Copper Business was Rs.4,774 crore in Q3 FY20 versus Rs.5,943 crore a year ago. EBITDA was lower at Rs.256 crore in Q3 FY20 compared to Rs.490 crore in Q3 FY19, down by 48 per cent year-on-year, primarily due to lower volumes and realisations in Q3 FY20.

Consolidated Results

Hindalco’s consolidated revenue for Q3 FY20 stood at Rs.29,197 crore compared to Rs.33,213 crore in the same quarter last year. Total EBITDA was at Rs.3,676 crore in Q3 FY20 (versus Rs.4,080 crore in Q3 FY19), down by 10 per cent year-on-year. Consolidated Profit before Exceptional Items and Tax was Rs.1,487 crore in Q3 FY20 compared to Rs.1,931 crore in the prior year, down by 23 per cent. Profit After Tax (PAT) stood at Rs.1,062 crore in Q3 FY20, down by 24 per cent, compared to the third quarter of FY19. The consolidated net debt to EBITDA ratio was 2.65x as on 31 December 2019 versus 2.48x on 31 March 2019.

Commenting on the results, Mr. Satish Pai, Managing Director, Hindalco Industries Limited, said, “For the past few years, Hindalco has continuously focused on improving plant operations. These efficiencies have helped us stay strong and steady amid weak markets. Despite global conditions, Novelis showed an increase in can and auto sheet shipments, spurred by growing consumer preference for sustainable packaging options and automotive closed-loop recycling systems. In Q3 FY20, 80 per cent of our consolidated EBITDA was non-LME linked. These trends bear out our focus on building our downstream, value-added portfolio, both for domestic and international markets. All our strategic expansion projects in India and Novelis are on track. In January 2020, Novelis successfully issued US$1.6 billion bonds at attractive rates, reflecting the recognition and confidence in Hindalco-Novelis.”

Business Updates & Recognition

  • Novelis made excellent progress in advancing its major organic expansion projects in the US, China and Brazil. Notably, its greenfield automotive finishing plant in Guthrie, Kentucky, is in the commissioning process, with commercial shipments to customers expected to commence in the coming months.
  • Novelis has received anti-trust approval from China for the Aleris acquisition. The European Commission is currently evaluating the suitability of the proposed buyer of Aleris’ Duffel, Belgium plant. In the US, arbitration proceedings are in progress.
  • In January 2020, Novelis successfully issued US$1.6 billion bonds at 4.75 per cent due in 2030, to repay its existing US$1.15 billion 6.25 per cent bonds, due in 2024 with net interest savings of around US$17 million per annum. Balance proceeds of these bonds will be used to finance the ongoing Aleris acquisition.
  • Utkal Alumina’s capacity expansion of 500 Kt is on track and is expected to be commissioned in December 2020.
  • The Muri Alumina refinery re-started production in December 2019.
  • Hindalco won the “Silver Shield” for Excellence in Financial Reporting for FY2018-19 awarded by The Institute of Chartered Accountants of India (ICAI).

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 36 manufacturing units across 10 countries.

Registered Office: Ahura Centre, 1st Floor, B Wing, Mahakali Caves Road Andheri (East), Mumbai 400 093
www.hindalco.com, 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.

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