TIDMVED
RNS Number : 9579M
Vedanta Resources PLC
19 October 2016
Vedanta Resources plc
16 Berkeley Street
London W1J 8DZ
Tel: +44 (0) 20 7499 5900
Fax: +44 (0) 20 7491 8440
www.vedantaresources.com
19 Oct 2016
Vedanta Resources plc
Hindustan Zinc announces Q2 FY2017 Results
Vedanta Resources plc's subsidiary Hindustan Zinc Limited today
announced results for the second quarter ended 30 September
2016.
Hindustan Zinc Limited
Results for the Second Quarter and Half Year Ended September 30,
2016
"Accelerating sequential volumes backed by uptrend in zinc &
silver prices;
H2 to be stronger"
Highlights
-- Mined metal production at 192kt in Q2; up 51% q-o-q
-- Integrated metal production increased q-o-q: zinc 47%, lead
25% and silver 21%
-- Mined metal production from underground mines ramps up by 83%
y-o-y
-- EBITDA at Rs. 2,077 crore in Q2; up 84% q-o-q
-- H2 to be substantially stronger than H1
-- Board approves Dividend Policy
Mumbai, October 19, 2016: Hindustan Zinc Limited today announced
its results for the second quarter and half year ended September
30, 2016.
Mr. Agnivesh Agarwal, Chairman -
"The price rally in zinc continued this quarter with prices
climbing 18% from the previous quarter, consistent with its strong
fundamentals. Silver prices too have rallied coupled with
increasing silver volumes. Favourable market scenario and Company's
smooth transition to underground mining has boosted investor
confidence, heralding the Company's entry in the top 25 club in
terms of market capitalisation in India."
Financial Summary
(In Rs. Crore, except as stated)
Particulars Q2 Q1 H1
========================================= =========================== ================= ===========================
2017 2016 Change 2017 Change 2017 2016 Change
========================================= ======== ======== ======= ======== ======= ======== ======== =======
Sales/Income from Operations
Zinc 2,697 3,126 -14% 1,925 40% 4,622 6,173 -25%
Lead 496 552 -10% 340 46% 836 1,010 -17%
Silver 482 385 25% 360 34% 842 666 26%
Others 145 170 -15% 150 -3% 295 317 -7%
Total 3,820 4,233 -10% 2,775 38% 6,595 8,166 -19%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
EBITDA 2,077 2,218 -6% 1,130 84% 3,207 3,897 -18%
Profit After Taxes 1,902 2,248 -15% 1,037 83% 2,939 4,189 -30%
Earnings per Share (Rs., not annualised) 4.50 5.32 -15% 2.45 84% 6.96 9.91 -30%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
Mined Metal Production ('000 MT) 192 240 -20% 127 51% 318 472 -33%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
Refined Metal Production ('000 MT)
Integrated Refined Metal
Zinc 149 211 -30% 101 47% 250 398 -37%
Saleable Lead(1) 31 39 -22% 25 25% 55 67 -17%
Zinc & Lead 179 250 -28% 126 43% 305 465 -34%
Saleable Silver(2,3) (in MT) 107 110 -3% 89 21% 196 184 6%
Total Refined Metal
Zinc 150 211 -29% 102 47% 252 398 -37%
Saleable Lead(1) 31 40 -24% 25 25% 55 71 -22%
Zinc & Lead 181 252 -28% 127 43% 307 469 -35%
Saleable Silver(2,3) (in MT) 107 112 -4% 89 21% 196 187 5%
Wind Power (in million units) 172 159 8% 148 16% 320 286 12%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
Zinc CoP without Royalty (Rs. / MT) (4) 54,186 50,278 8% 61,440 -12% 57,022 50,488 13%
Zinc CoP without Royalty ( $ / MT) (4) 809 771 5% 918 -12% 852 786 8%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
Zinc LME ($ / MT) 2,255 1,847 22% 1,918 18% 2,089 2,013 4%
Lead LME ($ / MT) 1,873 1,714 9% 1,719 9% 1,797 1,824 -2%
Silver LBMA ($ / oz.) 19.6 14.9 32% 16.8 17% 18.2 15.6 17%
USD-INR (average) 67.0 64.9 3% 66.9 0% 66.9 64.2 4%
========================================= ======== ======== ======= ======== ======= ======== ======== =======
(1) Excluding captive consumption of 837 MT in Q2 FY2017 &
1,921 MT in H1 FY2017 as compared with 1,514 MT & 3,698 MT in
respective corresponding prior period.
(2) Excluding captive consumption of 4.3 MT in Q2 FY2017 and 9.8
MT in H1 FY2016 as compared with 7.8 MT and 19.1 MT in respective
corresponding prior period.
(3) Silver occurs in Lead & Zinc ore and is recovered in the
smelting and silver-refining processes.
(4) The COP numbers are after adjusting for deferred mining
expenses under Ind-AS. Without this adjustment, Zinc CoP per MT
would have been Rs. 62,035 ($926) as compared with Rs. 50,236
($771) in Q2 FY 2016 and Rs. 76,448 ($1,142) in Q1 FY 2017. For H1
FY 2017 this would be Rs. 67,821 ($1,013) compared to Rs. 50,553
($787) compared to corresponding prior period.
Note:
1) Historical numbers have been revised as per Ind-AS
reporting
2) Numbers may not add up due to rounding off; historical
numbers may have changed due to regrouping
Operational Performance
Mined metal production during the quarter increased by 51% q-o-q
as per plan. The increase was primarily driven by higher ore
production from Rampura Agucha open cast where ore body was exposed
after high waste excavation during previous quarter in accordance
with the waste-ore sequence; this increase is despite heavy rains
during the quarter. On y-o-y basis, mined metal production was
lower by 20% as projected due to lower production from Rampura
Agucha mine.
In H1, mined metal output was at 318kt as compared with 472kt in
corresponding prior period, in line with plan. During this period,
the production from underground mines increased by 83% y-o-y, as
Rampura Agucha mine ramped up production from underground. The
Company is on track to achieve full year mined metal production
higher than FY 2016 with second half being substantially
higher.
Integrated zinc metal production during the quarter was at
149kt, up 47% q-o-q and down 30% y-o-y, in line with mined metal
production. In H1, integrated zinc metal production decreased by
37% y-o-y.
Integrated lead and silver metal production during the quarter
increased by 25% at 31kt and 21% at 107 MT respectively compared to
previous quarter. On y-o-y basis, integrated lead production was
down 22% in line with mined metal production while integrated
silver production was down 3%.
In H1, integrated lead production was lower by 17% from
corresponding prior period, in line with mined metal availability.
Integrated silver production was up 6% y-o-y in H1 despite lower
mined metal, on account of significantly higher production from
Sindesar Khurd mine. For the full year, integrated silver
production will be higher than FY 2016.
Financial Performance
Subsequent to adopting Indian Accounting Standards (Ind-AS) from
the current financial year, excise duty is now included in 'Sales'
and reported as 'Gross Sales'. Accordingly, historical revenue has
also been restated. Like in the previous quarter and in accordance
with Ind-AS, the Company has temporarily capitalised excess ore
burden of Rs. 141 crore during the quarter (Rs. 330 crore in H1) to
more closely relate the costs to actual production volumes, which
is expected to substantially reverse in H2 where waste excavation
will be lower. Change in method of depreciation on Plant &
Machinery from April 1, 2016, resulted in higher depreciation by
Rs. 175 crore during this quarter (Rs. 346 crore in H1).
Revenues increased by 38% sequentially at Rs. 3,820 crore but
were lower on y-o-y basis by 10% in the quarter and by 19% in H1.
On a sequential basis, revenue increased due to higher volumes and
metal prices, while the y-o-y decrease during the quarter and H1
was on account of lower volumes, partly offset by higher zinc &
silver prices and rupee depreciation.
The zinc metal cost of production per MT before royalty (COP)
during the quarter was at Rs. 54,186 ($809), down 12% from previous
quarter and up 8% y-o-y (5% in dollar terms). The sequential
reduction in COP was mainly on account of higher volumes, while the
y-o-y increase was attributed primarily to lower average grades due
to change in mining mix, higher mine development and planned lower
production. Cost reduction initiatives for operational and
commercial efficiencies were partly offset by higher petroleum
product prices and lower acid prices.
The above revenue and COP resulted in EBITDA at Rs. 2,077 crore,
up 84% q-o-q and down 6% y-o-y. On a sequential basis, EBITDA
increase was accentuated by write back and lower provisions in
'Power & Fuel'. For six month period, EBITDA was lower by 18%
in line with production, partly offset by higher silver & zinc
prices and rupee depreciation.
Net profit during the quarter was at Rs. 1,902 crore, up 83%
q-o-q in line with EBITDA increase and down 15% y-o-y. For six
month period, net profit was lower by 30% at Rs. 2,939 crore. The
y-o-y decrease for Q2 and H1 was due to higher depreciation and
lower investment income on account of smaller corpus despite higher
mark to market gains.
Expansion Projects
Continuing with the high pace of mine development, the Company
achieved total mine development of 14,716 metres during Q2 and
28,728 metres in H1, up 12% and 14% respectively from a year
ago.
With the objective of mitigating the risk of any delays in ramp
up of Rampura Agucha underground mine, Stage V was conceptualized
in late 2014 to extend the life of the open cast mine to 2019-20 by
deepening the pit by an additional 50 metres. However, concurrent
mining at Rampura Agucha is leading to geotechnical challenges in
both the open pit and underground. After deliberations with
internal & global technical experts, it has been decided to
modify Stage V limiting the incremental pit depth to 30 metres.
This will mitigate pit wall challenges and significantly reduce
waste-ore ratio, providing a fresh impetus to accelerating mine
development at the underground mine in a safe manner. Ore
production from Stage V commenced during the quarter and is now
being accelerated to complete by March 2018. The expansion target
of 1.2 million MT mined metal production remains intact and will be
achieved as per plan.
Main shaft sinking at Rampura Agucha is progressing well and has
reached the depth of 920 meters against the final depth of 950
meters. Winder erection is at advanced stage of completion and
pre-equipping work of main shaft commenced during the quarter.
At Sindesar Khurd mine, preparatory work for head gear erection
of main shaft commenced during the quarter while up-ramp
development work is progressing well. The construction of new mill
of 1.5 mtpa is on track and commissioning is expected by end of the
financial year, taking the milling capacity to 4.25 mtpa.
Zawar mill debottlenecking along with associated power and
infrastructure projects are advancing well and planned to be
completed by end of this financial year. Decline development at key
mines of Zawar is progressing well.
Kayad project is now complete and mine has attained its rated
capacity.
Dividend
In accordance with the recent SEBI guideline, the Board of
Directors has approved the Company's Dividend Policy which entails
a minimum dividend of 30% of net profits or 5% of networth,
whichever is higher. The detailed policy is available on Company
website www.hzlindia.com. Considering the Special Golden Jubilee
dividend paid in April, no interim dividend is being paid now.
Liquidity and investment
As on September 30, 2016, the Company's net cash and cash
equivalents was Rs. 25,166 crore, out of which Rs. 22,726 crore was
invested in mutual funds and Rs. 4,331 crore in bonds. The Company
follows a conservative investment policy and invests in high
quality debt instruments.
Earnings Call on Thursday, October 20, 2016 at 4:30 pm (IST)
The Company will hold an earnings conference call on Thursday,
October 20, 2016 at 4:30 pm IST, where senior management will
discuss the Company's results and performance. The dial in numbers
for the call is given below:
Primary: +91 22 3960 0762 Secondary: +91 22 6746 5962
For further information, please contact:
Communications Finsbury
Roma Balwani Daniela Fleischmann
President - Group Communications, Tel: +44 20 7251 3801
Sustainability
and CSR
Tel: +91 22 6646 1000
gc@vedanta.co.in
Investors
Ashwin Bajaj Tel: +44 20 7659 4732
Director - Investor Relations Tel: +91 22 6646 1531
ir@vedanta.co.in
Radhika Arora
Associate General Manager
- Investor Relations
Ravindra Bhandari
Manager - Investor Relations
About Vedanta Resources
Vedanta Resources plc ("Vedanta") is a London listed diversified
global natural resources company. The group produces aluminium,
copper, zinc, lead, silver, iron ore, oil & gas and commercial
energy. Vedanta has operations in India, Zambia, Namibia, South
Africa, Ireland and Australia. With an empowered talent pool
globally, Vedanta places strong emphasis on partnering with all its
stakeholders based on the core values of trust, sustainability,
growth, entrepreneurship, integrity, respect and care. For more
information, please visit www.vedantaresources.com.
Disclaimer
This press release contains "forward-looking statements" - that
is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance, and often contain words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "should" or "will." Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
For us, uncertainties arise from the behaviour of financial and
metals markets including the London Metal Exchange, fluctuations in
interest and/or exchange rates and metal prices; from future
integration of acquired businesses; and from numerous other matters
of national, regional and global scale, including those of a
political, economic, business, competitive or regulatory nature.
These uncertainties may cause our actual future results to be
materially different that those expressed in our forward-looking
statements. We do not undertake to update our forward-looking
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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