Vedanta earnings up 90% as production, metal prices rise

livemint, The Wall Street Journal, May 16, 2007
Chanyaporn Chanjaroen/Bloomberg
London: Vedanta Resources Plc., India’s largest producer of copper and zinc, said its fiscal second-half profit rose 90% on higher metal prices and aluminium output.
Net income gained to $486.6 million (approx. Rs1,995 crore), from $256.6 million a year earlier. The profit, calculated from full-year figures reported on Wednesday by the London-based company, was in line with the $486 million average of six analyst forecasts compiled by Bloomberg.
“Production across all the metals will be better this year,” chief executive officer Kuldip Kaura said in a conference call in London.
Expansion plans: Vedanta chairman Anil AgarwalGrowing Chinese metals demand helped the average copper price in the period rise 41% from a year earlier, while aluminium increased 24%. Vedanta, controlled by billionaire Anil Agarwal, has also increased production, expanding output at its Korba aluminium smelter in India.
Aluminium for immediate delivery on the London Metal Exchange averaged $2,721 a tonne in the six months, and copper averaged $6,522. Zinc doubled, trading at a record.
Shares of Vedanta have gained 16% this year, valuing the company at £4.07 billion ($8.08 billion). That matched the increase in the Bloomberg Europe Metals & Mining Index, which tracks 10 companies including Vedanta.
Output of aluminium rose 67% to 3,51,000 tonnes for the fiscal year, the company said on 11 April. Zinc gained 23% to 3,48,000 tonnes. Copper cathode, a finished form of the metal, rose 15% to 3,13,000 tons at Vedanta’s Indian units.
The company’s copper output in Zambia dropped 13% to 1,42,000 tonnes after a power outage and a closure caused by water pollution at its Konkola copper mines unit, the largest producer of the metal in the African nation’s copperbelt region.
Earnings before interest, tax, depreciation and amortization at the company’s aluminium unit more than tripled to $415.4 million in the fiscal year ended March, the biggest gain of any Vedanta unit. The zinc unit’s Ebitda more than doubled to $1.5 billion and copper rose 96% to $833.9 million.
“Economic and industrial growth in India will continue to drive double-digit growth in our commodities,” Agarwal said in the earnings statement.
Vedanta will pay a final dividend of 20 cents a share, from 14.3 cents a year earlier. Net income more than doubled to $934.2 million, or $3.05 a share, in the 12 months ended 31 March, from $373.5 million, or $1.28, a year earlier. Sales increased 76% to $6.5 billion.
Vedanta has begun the second phase of its $7.5 billion expansion programme to increase production at its copper, zinc and aluminium units to one million tonnes each. The company will start production at the Lanjigarh alumina refinery in Orissa by the end of June, it said. The unit can produce at an annual rate of 1.4 million tonnes a year.
Expansion at the Chanderiya zinc smelter, with a capacity of 170,000 tonnes a year, will be complete by the end of this year, ahead of schedule, Kaura said. Construction has begun on a 2,400MW power project in Jharsuguda with an estimated cost of $1.9 billion. Completion is expected in 2010.