Sesa Sterlite Limited: HZL Announces Results for the Second Quarter Ended September 30, 2014

MUMBAI, India, October 20, 2014 /PRNewswire/ --

The following release was issued by Sesa Sterlite Limited's subsidiary Hindustan Zinc Limited.

_______________________________________________________________________________________

Hindustan Zinc Limited 

Results for the Second Quarter Ended September 30, 2014 

"EBITDA increases 5%, Net profit up 33%; 95% interim dividend paid" 

Highlights for the quarter  

• Mined metal production - 213kt: up 30% sequentially, down 4% y-o-y
• EBITDA - Rs. 2,000 crore: up 48% sequentially and 5% y-o-y
• PAT - Rs. 2,184 crore: up 35% sequentially and 33% y-o-y

Hindustan Zinc Limited today announced its results for the second quarter ended September 30, 2014.

(Logo: http://photos.prnewswire.com/prnh/20140117/663814 )

Financial Summary  

(In Rs. Crore, except as stated)

   
    Particulars                                  Q2                  Q1                 H1
                                           2015   2014   Change     2015     2015    2014  Change
    Net Sales/Income from Operations
    Zinc                                 2,839    2570     10%     2,057    4,896    4556      7%
    Lead                                   443     453     -2%       452      895     855      5%
    Silver                                 313     388    -19%       318      631     796    -21%
    Others                                 154     110     40%       136      290     253     15%
    Total                                3,749    3521      6%     2,963     6712   6,460      4%
    EBITDA                               2,000    1904      5%     1,352    3,352   3,410     -2%
    Profit After Taxes                   2,184    1640     33%     1,618    3,801   3,301     15%
    Earnings per Share (Rs.)              5.17    3.88     33%      3.83     9.00    7.81     15%
    Mined Metal Production ('000 MT)       213     222     -4%       163      376     459    -18%
    Refined Metal Production ('000 MT)
    Total Refined Zinc                     181     196     -8%       141      321     370    -13%
    - Refined Zinc - Integrated            174     195    -11%       139      312     368    -15%
    Total Saleable Refined Lead[1]          30      30      0%        31       61      61      0%
    - Saleable Lead - Integrated            26      29    -12%        22       47      56    -16%
    Total Refined Saleable
    Silver[2],[3](in MT)                    80      90    -11%        82      162     186    -13%
    - Saleable Silver - Integrated          67      83    -19%        56      123     160    -23%
    Wind Power (in million units)          170     151     13%       146      316     313      1%
    Zinc CoP without Royalty (Rs. / MT) 55,154  50,522      9%    60,093   57,306  48,615     18%
    Zinc CoP without Royalty ( $ / MT)     910     816     12%     1,005      952     822     16%
    Zinc LME ($ / MT)                    2,311   1,859     24%     2,074    2,196   1,850     19%
    Lead LME ($ / MT)                    2,181   2,102      4%     2,096    2,140   2,076      3%
    Silver LBMA ($ / oz.)                 19.8    21.4     -7%      19.6     19.7    22.2    -11%
    USD-INR                               60.6    62.1     -2%      59.8     60.2    59.1      2%

(1)  Excluding captive consumption of 1,762 MT in Q2 FY 2015 and 3,451 MT in H1 FY 2015, as compared with 1,700 MT and 3,344 MT respectively in corresponding prior periods.                  

(2)  Excluding captive consumption of 9.1 MT in Q2 FY 2015 and 17.8 MT in H1 FY 2015, as compared with 9.0 MT and 17.8 MT respectively in corresponding prior periods.                  

(3)  Silver occurs in Lead & Zinc ore and is recovered in the smelting and silver-refining processes  

Note: Numbers may not add up due to rounding off.

Mr. Agnivesh Agarwal, Chairman - "Positive zinc fundamentals have translated into improved LME prices. At the same time, we continue to demonstrate our commitment towards project development and delivering value to stakeholders. We remain focused on improving the profitability of our operations."

Operational Performance 

Mined metal production in Q2 FY 2015 was up by 30% sequentially at 212,575 MT, as compared with 163,131 MT in previous quarter and down 4% from 221,646 MT a year ago. For six month period, mined metal production was 375,706 MT as compared to 459,471 MT in H1 FY 2014. This is in line with our mine plan at Rampura Agucha of lower mined metal production in the first half of the year as we excavated more waste than ore and exposed the ore body by September; this will contribute higher volumes in the second half of the year.

Integrated production of refined zinc, lead and silver were up sequentially by 25%, 18% and 21% respectively but were down on year on year basis due to planned lower MIC production in H1 and smelter shutdowns.

The zinc metal cost of production before royalty during the quarter was Rs. 55,154 ($910), which is higher by 9% (12% in USD terms) from a year ago, though it improved significantly from Q1. The increase is attributed to lower production volumes, smelter shutdown costs, increased employee expense on account of long-term wage agreement and higher mine development expenses, partly offset by higher credits and rupee appreciation.

The long term wage agreement will result in an increase of $16 per MT on zinc cost of production on a recurring basis, which is already factored in the above mentioned COP.

Financial Performance 

Revenues were up 6% to Rs. 3,749 crore in Q2 FY 2015 from a year ago. The y-o-y increase was driven by higher zinc LME price, partly offset by lower volumes & silver prices and rupee appreciation. In H1 FY 2015, revenues increased by 4% to Rs. 6,712 crore.

EBITDA was up by 5% to Rs. 2,000 crore in Q2 FY 2015 as compared to previous year, primarily due to higher LME prices despite lower volumes and the recent increase in royalty rates^[1]. For six month period, EBITDA witnessed a marginal decline of 2%.

Net profit increased by 33% to Rs. 2,184 crore in Q2 FY 2015 as compared to corresponding prior quarter. The impact of EBITDA increase was further accentuated by strong treasury income during the period. In H1 FY 2015, net profit was up by 15% to Rs. 3,801.

Expansion Projects 

Mine development has increased 21% in H1 to 24.9 km from 20.6 km a year ago.

All expansion projects are advancing well although the progress of Rampura Agucha underground was slower than expectation in H1. Underground mine development rates at Rampura Agucha are expected to improve during H2 due to enhancement in productivity and resources. To mitigate the risk of delay in expansion projects, mine design and planning for further deepening of the pit at Rampura Agucha is under progress, which will extend the life of the open pit. The preparatory work for pit deepening is likely to be initiated in the last quarter.

Shaft sinking at Sindesar Khurd is ahead of schedule and has reached a depth of 950m while Rampura Agucha main shaft has reached a depth of 430m. Paste fill plants at these locations were completed and capitalised during the quarter.

During the quarter, environmental clearance was received for enhancement of production capacity of Kayad mine from 0.35 MTPA to 1.0 MTPA.

Outlook 

We reiterate our guidance of marginal growth in mined metal and silver production in FY 2015. Integrated zinc-lead metal production is expected to witness a strong growth in H2 over H1, in sync with mined metal production growth.

Interim Dividend 

The Board of Directors had declared an interim dividend of 95% i.e Rs 1.90 per share on equity share of Rs 2.00 each, as compared to interim dividend of Rs 1.60 per share last year. This was paid out towards the end of the quarter.

Liquidity and investment  

As on September 30, 2014, the Company had cash and cash equivalents of Rs. 27,475 crore, out of which Rs. 25,241 crore was invested in mutual funds and Rs. 2,214 crore in bonds. The Company follows a conservative investment policy and invests in high quality debt instruments.

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1. Zinc and Lead mining royalty increased during the quarter w.e.f 01.09.2014.  Zinc royalty increased from 8.4% to 10.0% and lead royalty increased from 12.7% to 14.5% of respective LME prices chargeable on contained metal in the ore produced.

For further information, please contact: 

    Preeti Dubey, CFA                    Ekta Singh
    General Manager                      Associate Manager
    Investor Relations                   Investor Relations
    Hindustan Zinc Limited               Hindustan Zinc Limited
    [email protected]                 [email protected]
    Tel: +91-294-6604017                 Tel: +91-800-3099676

About Hindustan Zinc 

Hindustan Zinc (NSE & BSE: HINDZINC) is the one of the largest integrated producers of zinc-lead with a capacity of 1.0 million MT per annum and a leading producer of silver.  The Company is headquartered in Udaipur, Rajasthan in India and has zinc-lead mines at Rampura Agucha, Sindesar Khurd, Rajpura Dariba, Zawar and Kayad; primary smelter operations at Chanderiya, Dariba and Debari, all in the state of Rajasthan; and finished product facilities in the state of Uttarakhand.

Hindustan Zinc has a world-class resource base with total reserve & resource of 365.1 million MT and average zinc-lead reserve grade of 12.0%. The Company has a track record of consistently growing its reserve & resource base since 2003 and currently has a mine life of over 25 years.

The Company is self-sufficient in power with an installed base of 474 MW coal-based captive power plants. Additionally, it has green power capacity of 309 MW including 274 MW of wind power and 35 MW of waste heat power. The Company has an operating workforce of over 18,000 including contract workforce.

Hindustan Zinc is a subsidiary of the BSE and NSE listed Sesa Sterlite Limited (ADRs listed on the NYSE), a part of London listed diversified metals and mining major, Vedanta Resources plc.

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.

For further information, please contact: 

      Communications
      Roma Balwani                                      Tel: +91-22-6646-1000
      President - Group Communications,                 [email protected]
      Sustainability & CSR


      Investor Relations
      Ashwin Bajaj                                      Tel: +91-22-6646-1531
      Director - Investor Relations                     [email protected]
      Sheetal Khanduja
      Associate General Manager - Investor Relations

About Sesa Sterlite Limited 

Sesa Sterlite Limited ("Sesa Sterlite") is one of the world's largest diversified natural resources companies. Our business primarily involves exploring, extracting and processing minerals and oil & gas. We produce oil & gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power and have a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and Sri Lanka. Sesa Sterlite has a strong position in emerging markets with over 80% of its revenues from India, China, East Asia, Africa and the Middle East.

Sustainability is at the core of Sesa Sterlite's strategy, with a strong focus on health, safety and environment and on enhancing the lives of local communities.

Sesa Sterlite is a subsidiary of Vedanta Resources plc, a London-listed company. Sesa Sterlite is listed on the Bombay Stock Exchange and the National Stock Exchange in India and has ADRs listed on the New York Stock Exchange.

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 behavior 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.

Sesa Sterlite Limited
(Formerly known as Sesa Goa Limited)
Vedanta, 75, Nehru Road,
Vile Parle (East), Mumbai - 400 099
http://www.sesasterlite.com
 
Registered Office:
Sesa Ghor, 20 EDC Complex,
Patto, Panaji (Goa) - 403 001
CIN: L13209GA1965PLC000044

SOURCE Sesa Sterlite Limited