Hindalco reports Q4 and FY19 results

16 May 2019

Full-year consolidated PAT, PBT and EBITDA at all-time high

Key highlights of FY19 (vs FY18):

  • Record consolidated PAT at Rs.5,495 crore, up 22 per cent YoY (Rs.4,518* crore in FY18)
  • Record consolidated PBT (before exceptional items) at Rs.8,083 crore, up 24 per cent YoY
  • Record consolidated EBITDA at Rs.16,627 crore, up 11 per cent YoY
  • Record Novelis adjusted EBITDA at US$1,368 million, up 13 per cent YoY
  • Record Novelis adjusted EBITDA per tonne at US$ 418, up 10 per cent YoY
  • Novelis recycling footprint at 61 per cent vs. 57 per cent in FY18
  • Record EBITDA for Hindalco standalone plus Utkal Alumina at Rs.7,532 crore, up 5 per cent YoY
  • Record PAT for Hindalco standalone plus Utkal Alumina at Rs.2,678 crore, up 22 per cent YoY (Rs.2,197* crore in FY18)
  • Record copper continuous cast rod production at 245 Kt, up 47 per cent YoY
  • Stronger balance sheet, with prepayment of long term loans of Rs.1,575 crore
  • Consolidated net debt to EBITDA stood at 2.48x end March 2019 (2.82x end March 2018)

Mumbai – Hindalco Industries Ltd., a global leader in aluminium and copper, today announced results for the fourth quarter and year ended 31 March 2019. The company recorded its strongest full-year performance with consolidated PAT, PBT and EBITDA at an all-time high. The robust performance amid a challenging business environment was driven by record results by Novelis and the Indian Aluminium Business, and a sustained performance by the Copper Business.

Financial Summary – Q4 & FY19

Description (In Rs. crore)
HIL Standalone plus Utkal# Consolidated
Q4 FY18 Q3 FY19 Q4 FY19 FY18 FY19 FY18 FY19
Revenue from Operations 11,687 11,944 12,455 43,462 45,908 1,15,820 1,30,542
Earning Before Interest, Tax and Depreciation (EBITDA)              
Aluminium 1,265 1,286 1,043 4,790 5,202 4,691 5,107
Copper 329 431 315 1,539 1,469 1,594 1,516
Novelis           7,903 9,194
Others 213 209 375 825 861 837 810
Total EBITDA 1,807 1,926 1,733 7,154 7,532 15,025 16,627
Profit before Exceptional Items and Tax 773 944 740 3,023 3,660 6,508 8,083
Exceptional Income/ (Expenses) (Net) - - - (313) - 1,774 -
Profit Before Tax (After Exceptional Item) 773 944 740 2,709 3,660 8,282 8,083
Profit/ (Loss) After Tax 616 713 506 1,934 2,678 6,083 5,495
Earnings per Share (EPS) - Basic (In Rupees) 2.76 3.20 2.27 8.68 12.01 27.3 24.7
Note:

# The above financials include relevant numbers of Utkal Alumina International Ltd. (100 per cent subsidiary of Hindalco), from its accounts, to present a comprehensive view of the business. For this purpose, standard principles of consolidation have been applied by elimination of inter-company transactions and unrealised profit or loss in the inventory. For comparison purposes, previous period numbers have also been presented in a similar manner. Post the applicability of GST with effect from 1 July 2017, Revenue is required to be disclosed net of GST as per the requirement of Ind AS 18, ‘Revenue’. Accordingly, the Revenue figures for the quarter and full year ended 31 March 2018 are not comparable with the previous periods.

Consolidated results

Hindalco’s consolidated revenue for FY19 stood at Rs.1,30,542 crore compared to Rs.1,15,820 in FY18. The company delivered its highest ever consolidated EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) at Rs.16,627 crore, up 11 per cent in FY19 compared to the prior year. This buoyant performance was driven by stable operations, supporting macros and improved efficiencies. Consolidated Profit before Tax (and Before Exceptional Items) for FY19 rose to Rs.8,083 crore, up 24 per cent compared to FY18. Profit After Tax soared to Rs.5,495 crore (Rs.4,518* in FY18), an increase of 22 per cent.

India businesses (Hindalco Standalone Plus Utkal Alumina)

Revenue from operations touched Rs.45,908 crore for FY19. EBITDA was at a record high of Rs.7,532 crore, a 5 per cent increase over the previous year. This spirited performance, despite a sharp rise in input costs, was on the back of stable operations, supporting macros and improved operational efficiencies. Depreciation was higher by 4 per cent due to progressive capitalisation of assets. Interest expense declined 15 per cent YoY primarily due to prepayment of a term loan of Rs.1,575 crore and the re-pricing of long-term project loans. Profit after Tax (PAT) for FY19 leaped to Rs.2,678 crore vs. Rs.2,197* crore in FY18, registering a 22 per cent YoY growth.

In Q4 FY19, revenue from operations stood at Rs.12,455 crore (Rs.11,687 crore in Q4 FY18), up 7 per cent. EBITDA for the quarter was at Rs.1,733 crore (Rs.1,807 crore in Q4 FY18). PAT for Q4 FY19 stood at Rs.506 crore (Rs.616 crore in Q4 FY18), primarily due to weaker macros and higher input costs in the last quarter.

Business highlights – FY19

Novelis Inc.
Novelis delivered its best ever performance in FY19 with a significant year-over-year increase in net sales and adjusted EBITDA. Revenue grew 8 per cent to US$12.3 billion, driven by higher average aluminium prices, record shipments and an enriched product mix. Total shipments of flat rolled products (FRP) grew 3 per cent to 3,274 Kt in FY19, with a 7 per cent growth in beverage can shipments and a 2 per cent growth in automotive body sheet shipments YoY. Adjusted EBITDA grew 13 per cent to US$1.368 billion, compared to US$1.215 billion in FY18, driven by higher shipments, operational efficiencies and a favourable product mix. Adjusted EBITDA per tonne was higher by 10 per cent at US$418 in FY19 vs. US$381 for the prior year. Novelis leveraged its extensive recycling footprint and increased its recycled contents from 57 per cent to 61 per cent in FY19.

In Q4 FY19, adjusted EBITDA per tonne stood at US$411 (Vs $397 in Q4 FY18), up 3 per cent YoY. For the quarter, Profit after Tax (excluding special items1) was at US$ 468 million, up 11 per cent compared to US$420 million in the prior year.

Aluminium (Hindalco Plus Utkal Alumina)

The Indian Aluminium business delivered a strong revenue growth at Rs.23,775 crore for FY19 compared to Rs.21,090 crore a year ago, on the back of stronger realisations and supportive macros. EBITDA at Rs.5,202 crore in FY19 grew 9 per cent compared to Rs.4,790 crore in FY18. This growth was driven by supporting macros, stable plant operations and improved efficiencies, offset by higher input costs in FY19. The company achieved record production of aluminium at 1,295 Kt, with alumina (including Utkal) at 2,893 Kt in FY19. Production of aluminium value added products (VAPs), excluding wire rods, grew 5 per cent to reach an all-time high of 321 Kt.

In Q4 FY19, the Indian aluminium business recorded an 8 per cent YoY growth in revenue at Rs.5,953 crore (Rs.5,513 crore in Q4 FY18). EBITDA for Q4 was at Rs.1,043 crore (Rs.1,265 crore in Q4 FY18), down 18 per cent due to lower LME and currency impact.

Copper

VAP (copper rod) production increased by 47 per cent to 245 Kt vs. 166 Kt in FY18, due to ramp up of the new Continuous Cast Rod-3 (CCR-3) facility. The CCR-3 plant achieved a production level of 117 Kt in FY19. DAP production jumped 48 per cent to 303 Kt in FY19 vs. 205 Kt last year. The overall production volumes (Copper Cathode) at 347 Kt in FY19 were lower by 15 per cent, due to reduced volumes on account of planned maintenance. Revenue from the Copper business stood at a steady Rs.22,155 crore in FY19 vs. Rs.22,382 crore in FY18. EBITDA was at Rs.1,469 crore vs. Rs.1,539 crore in FY18. Better by-product realisation for the year was offset by lower volumes due to planned maintenance and marginally lower Tc/Rc.

Revenue in Q4 FY19 was at Rs.6,503 crore (Rs.6,176 crore in Q4 FY18), up 5 per cent, aided by higher copper prices. EBITDA for the quarter was at Rs.315 crore (Rs.329 crore in Q4 FY18), lower by 4 per cent on account of lower Tc/Rc and volumes.

Key initiatives and project updates – FY19

  • Automotive expansion projects for Novelis in US and China are expected to be commissioned in FY21.
  • Expansion projects for additional rolling and recycling capacity in Novelis Brazil, are likely to be commissioned in FY21.
  • Novelis introduced the first aluminium sheet battery enclosure for next generation vehicles.
  • Regulatory approvals for the Aleris acquisition continue to progress and are expected to close in Q2 FY20.
  • Utkal Alumina’s brownfield capacity expansion of 500 Kt is expected to be operational by FY21.
  • Hindalco launched India’s first indigenous lightweight and eco-friendly aluminium bulker.
  • Hindalco’s aluminium foil for lithium-ion batteries has qualified ISRO standards. ARCI (International Advanced Research Centre for Powder Metallurgy and New Materials) has approved Hindalco’s aluminium foil for electric vehicle batteries.

Commenting on the results, Satish Pai, Managing Director, Hindalco Industries said, “Our FY19 consolidated profits reached an all-time high inspite of a difficult business environment. This resilient performance reflects the strength of our integrated business model, excellent operational capabilities, stable operations and our enriched product portfolio. Novelis’ innovative products and customer centric approach helped it deliver its best-ever performance. In India, our increased focus on downstream is already showing encouraging results with record aluminium value added product volumes this year. In copper too, the share of value added products (copper rods) has risen, helping the business maintain profitability despite lower volumes. Going forward, we expect the impetus provided by India’s growth to boost demand for aluminium. Rising imports of aluminium and copper, however, pose a threat and we look forward to suitable steps to provide a level playing field.”

* Adjusted for Tax-effected exceptional Items in FY18

1 Tax-effected special items may include restructuring & impairment, metal price lag, gain/loss on assets held for sale, loss on extinguishment of debt, loss/gain on sale of business.

About Hindalco Industries Limited

Hindalco Industries Limited (HIL) is the metals flagship company of the Aditya Birla Group. A US$18bn metals powerhouse, Hindalco is the world’s largest aluminium rolling and recycling company, and a major copper player. 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 37 manufacturing units across 11 countries.

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.

 

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