India's Hindalco Q4 profit drops 37%; sees strong demand ahead
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India`s Hindalco Industries, one of the country's largest aluminium and copper producers, reported a 37.4% drop in fourth-quarter profit on Wednesday as expenses mounted.
Consolidated net profit for the firm, the flagship metals producer of the Aditya Birla Group, fell to 24.11 billion rupees ($294.82 million) in the quarter ended March 31, compared with a profit of 38.51 billion rupees a year ago.
Revenue from operations edged up a meagre 0.17% and was outpaced by a 4.6% rise in total expenses, even as the cost of materials consumed fell 6.7% during the quarter.
However, Hindalco's second biggest segment copper saw a revenue growth of 14.5%.
In the year ahead, the company expects strong demand for copper and aluminium in India from the transport, electrical, and infrastructure segments, including building and construction, a top executive said during a press briefing.
"(For) both aluminium and copper, we are seeing very good demand in the Indian market," Satish Pai, managing diarector, said, adding the only uncertainty ahead was the benchmark London Metal Exchange aluminium prices.
Prices for the benchmark London Metal Exchange aluminium have slumped nearly 42% as of March 31 from its peak in early 2022, fuelled by worries over falling demand.
Revenue contribution from Hindalco's U.S. unit Novelis, which accounts for almost 65% of Hindalco's total revenue, fell 0.6% in the quarter. Revenue from aluminium upstream and downstream segments too fell.
Novelis had reported a 6% year-on-year fall in core profit earlier this month, hit by inventory destocking in the beverage packing market and macroeconomic impact on specialties products, mainly in the building and construction segment.
The company is the world's largest producer of rolled aluminium.
"The destocking, we think, is going to last probably another quarter...then we should start to see the impact of destocking going down because for Novelis the aerospace and auto markets are very strong," Pai said.
Brokerage Ambit Capital had pointed to comments from Ball Corp, one of Novelis' largest customers, ahead of the results, which lamented the company being stuck with high inventory.
Shares of Hindalco, a constituent of India's bluechip Nifty 50 index closed 0.83% down at 406.90 rupees. Hindalco also declared a dividend of 3 rupees per share for fiscal 2023.
($1 = 81.7800 Indian rupees)
