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India’s Hindalco on Tuesday reported first-quarter profit below estimates, hurt by a jump in expenses tied to disruptions at its Novelis unit’s Switzerland plant.
Consolidated net profit for the Aditya Birla Group-owned company surged 25% to 30.74 billion rupees (about $366 million). Analysts, on average, expected a profit of 36.71 billion rupees, according to LSEG data.
IPO-bound Novelis, which accounts for more than 60% of the firm’s overall revenue, incurred a net cash impact of $80 million from the shutdown of its Switzerland-based plant.
Hindalco’s total expenses grew over 4% to 522.61 billion rupees.
However, its bottom line still got a boost from strong sales and higher product prices at Novelis and its second-biggest business, copper.
During the quarter, global prices of base metals including aluminum and copper saw a sharp uptick amid supply shortages and rising demand, analysts said.
For the quarter, benchmark aluminum and copper prices on the London Metal Exchange rose 8% and 8.3%, respectively.
Peers Vedanta and NALCO also reported higher profit, benefiting from a rise in prices.
Hindalco expects strong demand for copper and aluminum in India, its managing director Satish Pai said in a post-earnings call.
Pre-tax profit at Novelis jumped 21% to 41.7 billion rupees, while overall revenue from operations grew nearly 8% to 570.13 billion rupees. Revenue from its copper business jumped 16%.
“Next quarter, I don’t see much issues. The aluminum prices are now running a little bit lower due to geopolitical concerns so really that’s the only negative I see. The demand seems to be strong, copper should have another good quarter,” Pai said.
The company was trying to find new sources for copper concentrate, but Pai said it would take two years before the supply-demand situation eases.
Pai did not give any specific timeline for Novelis’ IPO.
Its shares settled 1.3% lower at 621.4 rupees. The stock has crucial support around the 590-600 levels, said Aamar Deo Singh, senior vice president of research at Angel One.
($1 = 83.9370 Indian rupees)
(By Manvi Pant and Neha Arora; Editing by Mrigank Dhaniwala and Devika Syamnath)
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