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UPDATE: Hindalco 2Q Net Profit Rises 26% On Base Metal Sales

iconNov 10, 2010 11:15
Source:SMM

MUMBAI, Nov 09, 2010 (Dow Jones Commodities News via Comtex) --Hindalco Industries Ltd. (500440.BY) Tuesday posted a 26% increase in its second quarter unconsolidated net profit, boosted by a rise in copper and aluminum sales.

India's largest aluminum producer said net profit jumped to INR4.34 billion in the July-September quarter from INR3.44 billion a year earlier, while sales rose 19% to INR58.03 billion from INR48.90 billion.

Other income rose 43% to INR821.0 million from INR572.9 million, the company said, without providing a reason for the increase.

Hindalco's earnings still fell below market expectations. The average estimate in a Dow Jones Newswires poll of 11 analysts was for net profit of INR5.07 billion.

Yet sales beat the INR54.67 billion forecast in the poll, as demand for Hindalco's two main products--aluminum and copper--surged on booming demand from India's auto, construction and power sectors. Rising base metal prices on the London Metals Exchange have also helped the company's revenue growth.

Hindalco's copper division posted revenue of INR39.51 billion in July-September, up 21% from a year earlier, while revenue at its aluminum division climbed 16% to INR19.11 billion from INR16.49 billion.

Hindalco's unconsolidated earnings don't include the financial performance of its North American subsidiary, Novelis Inc.

Hindalco added that its profit gain was capped by the appreciation of the Indian rupee, higher energy costs and lower treatment and refining charges.

Miners pay copper smelters to refine their copper concentrates into usable metal. These treatment and refining charges constitute a major source of profit for copper smelting companies, such as Hindalco.

Hindalco, which is part of the diversified Aditya Birla Group, added that its copper cathode output rose to 94,104 tons in the latest quarter from 89,692 tons a year earlier.

But aluminum output in the second quarter fell to 123,325 tons from 139,895 tons due to power outages at its Hirakud smelter. The smelter is expected to resume normal operations in the January-March quarter.

The company Monday said operations at its Dahej copper smelter-3 in the western state of Gujarat have been halted due to the breakdown of a cooling tower. Repairs are likely to be completed in two weeks.

On its expansion plans, Hindalco said it expects to commission its 359,000 tons a year Mahan aluminum smelter in the central Indian state of Madhya Pradesh in July-September next year.
 

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