Kolkata: The trend of Indian metal companies taking a battering in its Q1 profitability continues with Aditya Birla Group flagship firm Hindalco Industries on Friday posting a 27.9 per cent decline in consolidated profit at Rs 1,062.89 crore. The company had posted a profit of Rs 1,474.69 crore in the year-ago period. Earlier, Vedanta Ltd also witnessed a 12 per cent drop in Q1 net. The significant drop in nets, according to analysts, can be attributed to softer metal prices, higher costs, US-chain trade tussles and global meltdown.
The net income of Hindalco, including its Utkal Alumina unit, declined to Rs 1.67 billion ($24 million) in the three months ended June 30 from Rs 7.34 billion a year earlier.
The company on Friday said that the US-China trade tensions continue to impact commodity markets and LME aluminum prices are expected to remain depressed due negative sentiment in the short-term, despite a deficit in supply forecast for this year.
"We continued to maintain our strong position in aluminium and copper in Q1 FY'20 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," said Hindalco Industries Managing Director Satish Pai.
Novelis led from the front to achieve record quarterly results, and the Indian businesses put up a resilient show amid subdued economic conditions, the company said. Significantly, the company's Novelis unit has lined up plans to takeover US aluminum producer Aleris, although it received a statement of objections from the European Commission in July. Novelis, last week, had clarified that the acquisition is progressing and the transaction was expected to close in the fourth quarter. Utkal Alumina's brownfield capacity expansion is also on track and is expected to be operational by the middle of 2020-21 financial year, the company said.
Meanwhile, Hindalco said that India's consumption of aluminum grew 7 per cent during the quarter from a year earlier, while demand for copper expanded 9 per cent.
