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Hindalco reports consolidated Q2 FY21 results

10 November 2020

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Stability in operations, an enriched product mix and upward market trajectory drive outstanding performance across all businesses

Consolidated Business EBITDA up 25 per cent year-on-year and 66 per cent sequentially

Consolidated PAT from Continuing Operations, at ₹1,785 crore, up 83 per cent YoY

Headline PAT at ₹387 crore despite the one-time impact on account of Lewisport Divestiture

Key Highlights of Q2 FY21

  • Consolidated Business EBITDA at ₹4,672 crore, up 25 per cent YoY; up 66 per cent QoQ
  • Consolidated PAT from Continuing Operations stands at ₹1,785 crore, up 83 per cent YoY
  • Consolidated PAT at ₹387 crore after considering net loss from running and divestiture of discontinued operations of ₹1,398 crore
  • Aluminium India Business EBITDA at ₹1,066 crore, up 32 per cent YoY; up 25 per cent QoQ
  • EBITDA margins in Aluminium India Business of 22 per cent, up 760 bps YoY
  • India Business PAT at ₹327 crore, up 86 per cent YoY; 289 per cent jump sequentially
  • All time high overall shipments by Novelis at 923 Kt, up 11 per cent YoY, and 19 per cent QoQ
  • All time high Novelis Adjusted EBITDA1 at $455* million, up 22 per cent YoY, and 80 per cent QoQ
  • All time high Adjusted EBITDA per ton1 at Novelis at $493, up 10 per cent YoY, and 51 per cent QoQ
  • Consolidated Net Debt to EBITDA at 3.52x as on September 30, 2020. (vs. 3.83x as at June 30, 2020)

*As per US GAAP; Novelis FY21 numbers include those of Aleris.
1Tax-effected special items include purchase price accounting adjustments, restructuring & impairment costs and metal price lag in

Mumbai: Hindalco Industries Limited, a global leader in aluminium and copper, today announced consolidated results for the quarter ended September 30, 2020. Despite a one-time impact of ₹1,398 crore on account of the divestiture of the Lewisport unit of Aleris, the Company reported a Consolidated PAT of ₹387 crore. Consolidated PAT for the continuing business, which reflects the Company’s Q2 performance, surged 83 per cent YoY, to ₹1,785 crore.

The results were driven by a strong performance by Novelis and India Aluminium Business, supported by higher volumes and better product mix, lower input costs, stability in operations, and cost saving initiatives. The Copper Business also bounced back from the disruption in Q1 FY21 with ramped up operations in the second quarter. Novelis reported an all-time high EBITDA as well as EBITDA per ton in Q2 FY21, backed by record performance in beverage cans, and a market revival in the automotive and high-end specialty markets in the US and Asia Regions.

Consolidated financial highlights for the quarter ended 30 September 2020

  (Rs. crore)
Particulars Q2 FY20 Q1 FY21 Q2 FY21 H1 FY20 H1 FY21
Revenue from Operations 29,657 25,283 31,237 59,629 56,520
Earning Before Interest, Tax, Depreciation & Amortisation (EBITDA)          
Novelis* 2,629 1,919 3,392 5,216 5,311
Aluminium (including Utkal) 808 856 1,066 1,662 1,922
Copper 307 37 208 614 245
All Other Segments (1) 1 6 (18) 7
Business EBITDA 3,743 2,813 4,672 7,474 7,485
Unallocable Income/ (Expense) - (Net) & GAAP Adjustments 175 (454) 499 213 45
EBITDA 3,918 2,359 5,171 7,687 7,530
Finance Costs 922 992 982 1,879 1,974
PBDT 2,996 1,367 4,189 5,808 5,556
Depreciation & Amortisation (including impairment) 1,249 1,551 1,838 2,484 3,389
Share in Profit/ (Loss) in Equity Accounted Investments (Net of Tax) 1 3 - 2 3
PBT before Exceptional Items and Tax 1,748 (181) 2,351 3,326 2,170
Exceptional Income/ (Expenses) (Net) (256) (419) 71 (278) (348)
Profit Before Tax (After Exceptional Item) 1,492 (600) 2,422 3,048 1,822
Tax 518 (31) 637 1,011 606
Profit/ (Loss) from Continuing Operations 974 (569) 1,785 2,037 1,216
Profit/ (Loss) from Discontinued Operations - (140) (1,398) - (1,538)
Profit/ (Loss) After Tax 974 (709) 387 2,037 (322)
*As per US GAAP
FY21 Hindalco consolidated financial statements include Aleris

Commenting on the results, Mr. Satish Pai, Managing Director, Hindalco Industries Ltd., said, “It is heartening to see a sharp recovery of demand to near pre-Covid levels in India Aluminium and Copper businesses. Novelis too sees a similar rise across segments, except for aerospace. Operationally, we have maintained high efficiency and productivity, thus enabling us to deliver a sharp increase in PAT as compared to both last quarter and last year.

Operational performance must go hand-in-hand with sustainability. In that context, I am happy to share that Hindalco has achieved 100 per cent red mud utilisation at three of its refineries, a global benchmark. As part of our commitment to the National Clean Air Programme, we are transporting fly ash by rail from four of our plants to cement manufacturing units all across the country. In keeping with our circular economy vision, we ensure that waste products such as fly-ash, bottom ash and red mud create value in the brick-making, cement making, roads and construction sectors.”

Business segment performance in Q2 FY21 (vs. Q1 FY21)
Novelis (including Aleris).

Novelis recorded an all-time high quarterly adjusted EBITDA of $455 million (vs $253 million), up 80 per cent QoQ, on the back of higher volumes, good cost control, better product mix and EBITDA contribution from the acquired Aleris business. Adjusted EBITDA per ton was at a record high of $493 in Q2 FY21 (vs $327/ton), up 51 per cent sequentially. Novelis reported a Net Income (excluding tax-effected special items1) of $158 million in Q2 FY21. Revenue was at $3.0 billion in Q2 FY21 (vs $2.4 billion), up 24 per cent, on account of higher LME and premiums. Total shipments of flat rolled products (FRPs) was at an all-time high of 923 Kt in Q2 FY21 (vs 774Kt), up 19 per cent sequentially, driven by revival of demand across segments, except aerospace.

Aluminium India

EBITDA stood at a healthy ₹1,066 crore in Q2 FY21, compared with ₹856 crore for Q1 FY21 reflecting a jump of 25 per cent sequentially on account of favourable macros and lower input costs. The EBITDA margin of 22 per cent was one of the best in the industry. Reported revenue of ₹4,796 crore in Q2 FY21 vs ₹4,436 crore in Q1 FY21, was up 8 per cent QoQ supported by higher aluminium prices. With smelter utilisation at more than 90 per cent in Q2FY21, Aluminium India Business achieved aluminium metal production of 307 Kt (vs 291 Kt). Aluminium metal sales at 303 Kt in Q2 FY21, were flat sequentially. Aluminium VAP (excluding wire rods) sales volumes in the second quarter were at 63 Kt (vs 35 Kt), up 81 per cent, with sharp recovery in the domestic market compared to the last year. VAP sales as a percentage of total metal sales have improved to 21 per cent in Q2 FY21 vs 11 per cent in Q1 FY21.

Copper

Copper Cathode production reached 73 Kt from 41 Kt in Q1 FY21, up 76 per cent, as a result of ramping up of operations, post recovery from Q1 disruptions due to Covid. Total copper metal sales were up 28 per cent QoQ, at 75 Kt, as demand revived in Q2. Copper Value Added Product (CC Rod) sales more than doubled QoQ, at 64 Kt,with recovery of the domestic market. DAP (fertiliser) sales volume was the highest ever, at 127 Kt, up 25 per cent QoQ, on the back of robust demand due to good monsoons. EBITDA for the business in Q2 FY21 bounced back to ₹208 crore compared to ₹37 crore in Q1 FY21 primarily due to higher sales volume of copper and fertilizer. Revenue from the Copper Business stood at ₹4,774 crore in the second quarter, up 58 per cent QoQ.

Consolidated Performance

Hindalco reported an outstanding consolidated quarterly operational and financial performance in Q2 FY21. Business EBITDA at ₹4,672 crore in Q2 FY21 (vs ₹2,813 crore), was up 66 per cent QoQ, driven by the best ever quarterly performance by Novelis and a sharp recovery in India Aluminium business. Consolidated Revenue for the second quarter of FY21 stood at ₹31,237 crore (vs ₹25,283 crore) up 24 per cent QoQ. Consolidated PAT from Continuing Operations stood at ₹1,785 crore vs ₹974 crore in Q2 FY20, up 83 per cent YoY. Consolidated PAT was ₹387 crore after considering net loss from running and divestiture of discontinued operations of ₹1,398 crore in Q2FY21. The consolidated net debt to EBITDA ratio was 3.52x on September 30, 2020, vs 3.83x on June 30, 2020.

Business Updates

  • Completed divestment of Duffel plant to ALVANCE, and signed an agreement for sale of Lewisport to American Industrial Partners, a private equity firm, for estimated net cash proceeds of $171 million; the integration work continues with $38 million run-rate acquisition cost synergies achieved to date.
  • The expansion in Brazil to support Novelis’ beverage can business continues to progress with commissioning expected in FY22.
  • Restarted commissioning process at Novelis’ automotive finishing line expansion at Guthrie, Kentucky and Changzhou, China; shipments to begin in end-FY21 and early FY22 respectively.
  • Utkal Alumina’s capacity expansion of 500 Kt is expected to be commissioned in Q4 FY21. .

About Hindalco Industries Limited

Hindalco Industries Limited is the metals flagship company of the Aditya Birla Group. A $16.7 billion metals powerhouse, Hindalco is the world’s largest aluminium rolling and recycling company, and a major player in copper. It is also one of Asia’s largest producers of primary aluminium. Guided by its purpose of building a greener, stronger, smarter world, Hindalco provides innovative solutions for a sustainable planet. Its wholly-owned subsidiary Novelis Inc. is the world’s largest producer of aluminium beverage can stock and the largest recycler of used beverage cans (UBCs). Hindalco’s copper facility in India comprises a world-class copper smelter, downstream facilities, a fertiliser plant and a captive jetty. The copper smelter is among the world’s largest custom smelters at a single location. Hindalco’s global footprint spans 47 manufacturing units across 10 countries.

Registered Office: Ahura Centre, 1st Floor, B Wing, Mahakali Caves Road Andheri (East),
Mumbai 400 093; Website: stasagagic.com; E mail: hindalco@adityabirla.com;Corporate Identity No. L27020MH1958PLC011238

Disclaimer: Statements in this “Media Release” describing the company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include global and Indian demand supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the company conducts business and other factors such as litigation and labour negotiations. The company assume no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events, or otherwise.