Hindalco Q2 net lags f'cast, sees tough H2

Non-ferrous metals producer Hindalco Industries lagged estimates with a 16 percent rise in quarterly net profit and warned the second half of this fiscal year would be tough due to global economic uncertainty and cost pressures.

The firm, part of the diversified Aditya Birla Group, said on Thursday it expects aluminium demand to remain weak due to slowing economic growth, while copper demand in Asia's third largest economy is also seeing weakness in some segments.

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"The second half of FY12 (that ends on March 31) will be difficult due to global uncertainties, falling LME prices and persisting cost pressures," the company said in a statement.

"It is expected to be challenging in terms of cost pressure, domestic demand and realisations," it said.

The company, India's largest aluminium producer and also a significant copper producer in the country, said its second quarter was severely impacted by rising raw material costs and restricted supply of bauxite and coal during the monsoon months.

Metal prices have declined in the past few months, mainly on growth concerns on account of Europe's debt woes.

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On Thursday, copper futures on the London Metal Exchange fell to their lowest level in two weeks, and are now down nearly a quarter so far in 2011. However, prices in the July-September quarter had been higher from a year earlier.

Aluminium futures on the LME, which are currently down nearly 15 percent this year, had also been higher when compared to a year earlier.

Hindalco, which gets 40 percent of its Indian revenue from aluminium, is trebling capacity in the country to 1.9 million tonnes by 2013 at a cost of about $5 billion.

Q2 PROFIT MISSES ESTIMATES

Hindalco reported standalone September-quarter net profit rose to 5.03 billion rupees from 4.34 billion a year ago on the back of higher volumes and prices in its aluminium business, and treasury gains and an increase in dividend income.

Net sales rose 7 percent to 62.20 billion rupees.

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A Reuters poll of nine brokerages had forecast quarterly net profit of 5.28 billion rupees on net sales of 62.35 billion.

Hindalco, which gets 60 percent of its revenue from copper, said the segment's revenues rose just 3 percent to 40.6 billion rupees as they were impacted by a shutdown at one of the smelters for nearly half the quarter.

In the aluminium segment, revenue rose 16 percent, it said.

On Wednesday, Hindalco's U.S.-based unit Novelis reported a near-doubling of second quarter net profit to $120 million on the back of higher average aluminium prices.

The aluminum products maker, however, cut its adjusted EBITDA forecast for fiscal 2012 due to the economic uncertainty in the euro zone.

Aditya Birla Group, which is on the lookout to secure its raw material supplies, may consider bidding for Australian coal miner New Hope Corp, sources told Reuters earlier this month.

Ahead of the results, Hindalco shares closed down 3.8 percent on Wednesday. The stock, valued at $5.2 billion by the market, has fallen nearly 46 percent so far in 2011, compared to a 15 percent fall in the main stock index.