Hindalco Q3 profit falls 63% to ₹1,362 cr on high input costs

Hindalco Industries , the Aditya Birla Group metals flagship, has reported a 63% fall in its net profit on a year-on-year basis to ₹1,362 crore in the October-December quarter of FY2022-23 on elevated input costs, unfavourable macros, and inflationary impacts. During Q2 FY23, too, Hindalco's net profit declined 35.5% to ₹2,205 crore on a drop in aluminium prices in the international market as well as higher input costs.

The company's consolidated revenue, however, rose 6% YoY to ₹53,151 crore in Q3 FY23, driven by higher volumes and steady operational performance across India operations.

The company's quarterly consolidated EBITDA also declined 48% YoY to ₹3,930 crore. The company's overall EBITDA was impacted by rising input costs and unfavourable macros, though it was partially offset by the better operational performance of copper and downstream businesses. These reported YoY growth of 40% (₹546 crore) and 24% (₹157 crore), respectively, on better pricing and recovery in domestic demand.

Hindalco says its U.S.-based subsidiary Novelis saw its revenue fall 3% YoY to $4.2 billion in Q3 FY23, driven by lower average aluminium prices and lower shipments. It reported an EBITDA of $341 million ($506 million in Q3 FY22, down 33% YoY) primarily due to lower shipments, higher inflationary pressures, less favourable metal benefits from recycling, unfavourable foreign exchange, partially offset by higher pricing, higher cost pass through to customers and a favourable product mix.

“We are seeing core industries worldwide being buffeted by macro-economic and inflationary cost pressures, yet we delivered a strong operational performance with higher volumes across India business segments. Though the India Aluminium upstream business EBITDA came under pressure from the surge in input costs and lower realisations, this was partially offset by higher volumes. The India Aluminium downstream business segment delivered a higher EBITDA YoY, due to higher volumes and better pricing. The Copper business registered a 40% growth in EBITDA driven by higher volumes and better realisations, supported by robust domestic demand," Satish Pai, MD, Hindalco Industries.

He said Novelis saw 'unprecedented" inflationary pressures, "unfavourable foreign exchange rates" and "lower shipments". However, this was partially offset by higher pricing and a favourable product mix. "Despite the hits of this quarter due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model.”

During the quarter, Hindalco said it began pilot production at its new 34Kt extrusions facility in Silvassa, India. Also, an additional 350 Kt expansion via debottlenecking at Utkal alumina is also in progress. Also, Hindalco secured its place in S&P Global Sustainability Yearbook 2023 for the second consecutive year, the company said. Hindalco stock closed 2.20% up at ₹446.10 on the NSE today. The stock has fallen 8.41% in the year-to-date period and 18.48% in the past year. Hindalco's current market cap stands at ₹99,854.09 crore.