Vedanta Resources PLC Hindustan Zinc announces Q3 FY2017 results (6053W)

TIDMVED

RNS Number : 6053W

Vedanta Resources PLC

10 February 2017

Vedanta Resources plc

16 Berkeley Street

London W1J 8DZ

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www.vedantaresources.com

10 February 2017

Vedanta Resources plc

Hindustan Zinc announces Q3 FY2017 Results

Vedanta Resources plc's subsidiary Hindustan Zinc Limited today announced results for the third quarter ended 31 December 2016.

Hindustan Zinc Limited

Results for the Third Quarter Ended December 31, 2016

"Highest ever mined metal production, EBITDA at all-time record"

Highlights

-- Record mined metal production at 276kt in Q3; up 44% q-o-q

-- Integrated metal production increased q-o-q: zinc 38%, lead 26% and silver 10%

-- EBITDA at Rs. 2,757 Crore in Q3; up 33% q-o-q

-- Environment clearances received for Zawar and Sindesar Khurd expansions

Mumbai, February 10, 2017: Hindustan Zinc Limited today announced its results for the third quarter ended December 31, 2016.

Mr. Agnivesh Agarwal, Chairman -

"2016 was a strong year as zinc prices surged over 55 percent during the quarter compared to a year ago. With no new zinc mines being commissioned in the near future, zinc market outlook remains positive for 2017 also. I am pleased to report a five year CAGR of 38 percent in our underground mined metal production. We are uniquely poised to benefit from these dynamics, being the only primary zinc producer in the country."

Unaudited Financial Summary (In Rs. Crore, except as stated)

 
 Particulars                                 Q3                    Q2            Nine Months Ended December 31, 2016 
=============================== 
                                   2017     2016    Change    2017    Change      2017          2016         Change 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 Sales/Income from Operations 
 Zinc                             4,120    2,685     53%     2,697     53%        8,742         8,858          -1% 
 Lead                              649      469      38%      496      31%        1,485         1,479          0% 
 Silver                            483      398      21%      482       0%        1,325         1,064          25% 
 Others                             96      124      -23%     145      -34%        391           441          -11% 
 Total                            5,348    3,676     45%     3,820     40%       11,943        11,842          1% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 EBITDA                           2,757    1,470     88%     2,077     33%        5,964         5,366          11% 
 Profit After Taxes               2,320    1,840     26%     1,902     22%        5,259         6,028         -13% 
 Earnings per Share (Rs., not 
  annualised)                      5.49     4.35     26%      4.50     22%        12.45         14.27         -13% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 Mined Metal Production ('000 
  MT)                              276      228      21%      192      44%         595           700          -15% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 Refined Metal Production ('000 
 MT) 
 Integrated Refined Metal 
     Zinc                          205      206       0%      149      38%         456           605          -25% 
    Saleable Lead(1)                39       35      10%       31      26%         94            102           -8% 
    Zinc & Lead                    244      242       1%      179      36%         550           707          -22% 
     Saleable Silver(2,3) (in 
      MT)                          118      116       2%      107      10%         314           300           5% 
 Total Refined Metal 
     Zinc                          205      206       0%      150      37%         457           605          -24% 
     Saleable Lead(1)               39       35      10%       31      26%         94            106          -12% 
     Zinc & Lead                   244      242       1%      181      35%         551           711          -22% 
     Saleable Silver(2,3) (in 
      MT)                          118      116       2%      107      10%         314           303           4% 
 Wind Power (in million units)      53       67      -21%     172      -69%        373           353           6% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 Zinc CoP without Royalty (Rs./ 
  MT) (4)                         58,067   52,452    11%     54,186     7%       57,198        51,118          12% 
 Zinc CoP without Royalty ( $ / 
  MT) (4)                          861      796       8%      809       6%         852           789           8% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 Zinc LME ($ / MT)                2,518    1,613     56%     2,255     12%        2,230         1,878          19% 
 Lead LME ($ / MT)                2,150    1,681     28%     1,873     15%        1,913         1,776          8% 
 Silver LBMA ($ / oz.)             17.2     14.8     16%      19.6     -12%       17.9          15.3           17% 
 USD-INR (average)                 67.5     65.9      2%      67.0      1%         67.1          64.8          4% 
===============================  =======  =======  =======  =======  =======  ============  ============  ============ 
 

(1) Excluding captive consumption of 1,731 MT in Q3 FY2017 as compared with 2,050 MT in corresponding prior period and 837 MT in previous quarter. For nine month period, it was 3,652 MT as compared with 5,748 MT a year ago.

(2) Excluding captive consumption of 8.9 MT in Q3 FY2017 as compared with 10.7 MT in corresponding prior period and 4.3 MT in previous quarter. For nine month period, it was 18.7 MT as compared with 29.7 MT a year ago.

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

(4) The COP numbers are after adjusting for deferred mining expenses under Ind-AS. Without this adjustment, Zinc CoP per MT would have been Rs. 50,277 ($745) as compared with Rs. 52,383 ($795) in Q3 FY 2016 and Rs. 62,035 ($926) in Q2 FY 2017. For nine month this would be Rs. 59,740 ($890) compared to Rs. 51,137 ($789) in corresponding prior period.

Note:

1) Historical numbers have been revised as per Ind-AS reporting

2) Numbers may not add up due to rounding off; historical numbers may have changed due to regrouping

Operational Performance

Highest ever mined metal production was achieved during the quarter, up 44% from previous quarter and 21% y-o-y. The q-o-q increase was on account of higher volumes from Rampura Agucha open cast mine in accordance with mine plan and the y-o-y increase was driven by higher volumes from Rampura Agucha underground as well as open cast mines. During the nine month period, underground mines ramped up significantly to achieve a substantial 60% y-o-y increase in ore production and 53% y-o-y increase in mined metal production. In line with the plan of substantially higher mined metal production in H2, mined metal production during the nine month period was lower by 15% y-o-y and will be higher than FY 2016 for full year with Q4 being higher than Q3.

Integrated zinc metal production during the quarter was at 205kt, up 38% from previous quarter and flat y-o-y on account of accretion of mined metal inventory. Integrated saleable lead metal production during the quarter was 39kt, up 26% sequentially and 10% y-o-y. The y-o-y increase was in line with mined metal production, while the sequential increase was accentuated on account of enhanced smelter efficiencies. Integrated saleable silver production during the quarter increased by 10% to 118 MT from previous quarter and 2% y-o-y. For the full year, integrated zinc metal production will be lower than FY 2016 in accordance with the low availability of mined metal in H1, however, some quantity of mined metal will be sold in Q4. Saleable lead production for the full year will be in line with FY 2016 and silver production will be higher than FY 2016.

Financial Performance

Revenues were at Rs. 5,348 Crore, up by 40% q-o-q and 45% y-o-y. The q-o-q increase was primarily on account of higher volumes and higher zinc & lead LME. The y-o-y increase was mainly driven by substantially higher volumes, higher metal prices and rupee depreciation

The zinc metal cost of production per MT before royalty (COP) during the quarter was at Rs. 58,067 ($861), up 7% q-o-q (6% in dollar terms) and 11% y-o-y (8% in dollar terms). The q-o-q increase in COP was largely on account of onetime change in the ore to waste ratio norm over life of mine and additional excavation in Rampura Agucha open cast, further accentuated by significantly higher mine development in underground mines, increase in coal prices and lower acid realisation, partly offset by higher volume & overall average grade. The y-o-y increase was attributed primarily to the aforementioned one time change in ore to waste ratio norm, substantially higher coal & commodity prices, lower acid realisation and higher mine development.

During the quarter, EBITDA was an all-time record of Rs. 2,757 Crore, up 33% q-o-q and 88% y-o-y.

Net profit during the quarter was at Rs. 2,320 Crore, up 22% q-o-q and 26% y-o-y. The impact of higher EBITDA was partly offset by higher depreciation & tax in both periods while investment income was sequentially lower on account of lower mark to market gains.

Expansion Projects

Total mine development, across all mines, increased by 26% sequentially and 17% y-o-y to 18,570 meters during the quarter. For nine month period, total mine development has reached 47,330 meters, up 16% from a year ago.

Rampura Agucha underground mine achieved a record ore production rate of over 2 million MT per annum (mtpa) at the exit of the quarter while mine development continued over 4,000 meters benchmark for the fourth quarter in a row. During the quarter, the main shaft sinking at Rampura Agucha reached its ultimate depth of 955 meters. Further, installation of production & service winders was also completed and shaft equipping work commenced during the quarter.

Sindesar Khurd mine achieved highest ever mine development during the quarter at 5,534 metres. Environmental clearance of expansion from 3.75 to 4.5 mtpa ore production and from 4.5 mtpa to 5 mtpa beneficiation at Sindesar Khurd was received in December. Casting of shaft collar and head gear foundation was completed during the quarter in line with the head gear erection completion scheduled for Q4. The power up-gradation project was commissioned ahead of schedule in January. The mill expansion to 1.5 mtpa capacity was also completed ahead of schedule and commissioned in the month of January. However, the Company is deeply anguished to report an unfortunate accident at the project site post mill commissioning, where a rare crane collapse caused four fatalities of contractor employees.

Environmental clearance of 4 mtpa ore production and beneficiation at Zawar was received in January following public hearings. Zawar mill expansion is advancing well and is planned to be completed by Q1 FY 2018 and the power up-gradation project is on track for commissioning by the end of this financial year.

In addition to the on-going mining expansion projects, fumer project commenced this quarter with 18 months completion period. This project will further improve cost and metal recoveries from the Company's hydro plant and might be replicated in other hydro plants in the coming years.

Further to the Company's commitment to green energy and subsequent to successful installation of two small roof top solar projects, the Company initiated installation of 16 MW captive solar farms at Debari and Dariba premises. Taking cognizance of green initiatives by the Company, Confederation of Indian Industry (CII)-Indian Green Building Council (IGBC) awarded the highest rating, 'Platinum', to the head office building 'Yashad Bhawan' in January. It is one of the only 14 CII-IGBC Platinum rated buildings in India and the first in Rajasthan.

Liquidity and investment

As on December 31, 2016, the Company's net cash and cash equivalents was Rs. 25,319 Crore, out of which Rs. 20,644 Crore was invested in mutual funds and Rs. 4,593 Crore in bonds. The Company follows a conservative investment policy and invests in high quality debt instruments.

Earnings Call on Friday, February 10, 2017 at 15:15 hrs (IST)

The Company will hold an earnings conference call on Friday, February 10, 2017 at 3:15 pm IST, where senior management will discuss the Company's results and performance. The dial in number for the call is:

   Primary Number: [phone]                         Local Access Number: 3940 3977 

Available in - Ahmedabad, Bangalore, Chandigarh, Chennai, Gurgaon (NCR), Hyderabad, Kochi/Cochin, Kolkata, Lucknow, Pune

Accessible from all carriers.

For further information, please contact:

 
 Communications                       Finsbury 
 Roma Balwani                         Daniela Fleischmann 
  President - Group Communications,    Tel: [phone] 
  Sustainability 
  and CSR 
  Tel: [phone] 
  [e-mail] 
 Investors 
 Ashwin Bajaj                         Tel: [phone] 
  Director - Investor Relations        Tel: [phone] 
                                       [e-mail] 
  Radhika Arora 
  Associate General Manager 
  - Investor Relations 
 
  Ravindra Bhandari 
  Manager - Investor Relations 
 

About Vedanta Resources

Vedanta Resources plc ("Vedanta") is a London listed diversified global natural resources company. The group produces aluminium, copper, zinc, lead, silver, iron ore, oil & gas and commercial energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Ireland, Liberia and Australia. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of trust, sustainability, growth, entrepreneurship, integrity, respect and care. For more information, please visit www.vedantaresources.com.

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.

This information is provided by RNS

The company news service from the London Stock Exchange

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February 10, 2017 05:09 ET (10:09 GMT)