30th Jan 2015 11:22
LONDON (Alliance News) - Vedanta Resources PLC Friday said earnings fell in the third quarter from a year earlier, despite revenue rising, due to lower oil and commodity prices and said production increased quarter on quarter across the board.
For the third quarter ended December 31, the company reported earnings before interest, tax, depreciation and amortisation of USD1.02 billion, down 11% from a year earlier when it reported an EBITDA of USD1.14 billion.
Revenue during the quarter totalled USD3.35 billion, compared to USD3.33 billion a year earlier. Revenue was driven by increased production, but weak oil prices saw a 30% reduction in oil and gas revenues during the period while falling copper prices hit copper revenue by 11%, offset by increased revenue generation from metals.
Gross daily production averaged 218,900 barrels of oil equivalent per day during the quarter following production at Rajasthan resuming normal levels after a planned maintenance shut-down carried out in the second quarter. This is a 13% increase quarter on quarter.
Rajasthan is the company's largest producing oil and gas asset, and achieved operating costs of USD5.70 per barrel, "one of the lowest in the world," said the company.
Vedanta's oil and gas businesses reported EBITDA of USD346 million in the third quarter, down 44% due to the company's royalty expense falling by 30% and because of the low oil prices.
"Our oil fields are resilient to volatility in oil prices due to their low operating cost and high margin and continue to generate positive free cash flows," it said.
Mined metal production from India in the third quarter rose 14% quarter on quarter and 10% year on year to 242,000 tonnes after the company saw increased production at the Ramura Agucha mine and achieved higher grades across all of its mines. Integrated refined zinc production was up 11% compared with the second quarter, on account of higher mined metal production.
Integrated saleable silver production was 3% higher compared to the second quarter, and 4% lower compared to the corresponding quarter last year. The year-on-year decrease was on account of build-up of work-in-progress, partly offset by better grades from Sindesar Khurd mine.
Zinc operations in India reported an EBITDA of USD336 million, up 14% year-on-year due to increased production and the lower cost of production, which fell by 9% quarter on quarter to USD813 per tonne.
Vedanta said mined metal production in India should increase in the fourth quarter, taking full year production "marginally higher" than last year.
Production of Zinc outside of India dropped 6% quarter on quarter due to lower production from the Lisheen mine, which is due to reach the end of its life in 2016. Cost of production rose to USD1,364 per tonne in the quarter from USD1,257 a year earlier due to production falling.
Copper production from Zambia totalled 29,000 tonnes in the third quarter, down 10% quarter on quarter due to ongoing remediation work. The cost of production of copper rose during the period.
Vedanta said changes introduced by the Zambian government in 2015, including the removal of corporate tax and raising royalties, will impact copper EBITDA by around USD15 million.
"We continue to engage with the [Zambian] government to resolve the issues relating to VAT refunds. We are also reviewing our operations in the light of lower copper prices, the VAT refund issue and the changes to royalty regime," said Vedanta.
"We made substantial progress during the quarter on enhancing production and starting up some of our new capacities," said Chief Executive Tom Albanese.
Vedanta reported cash and liquid investments of USD8.0 billion at the end of the quarter with undrawn facilities of USD850 million. Net debt stood at USD8.8 billion with USD1.27 billion in debt maturities in 2015, which are both being financed at lower costs, said Vedanta.
In addition, Vedanta said the government of India is set to auction off coal blocks, which it is considering participating in to meet local coal requirements for its power plants, said the company.
Vedanta shares were down 1.3% to 366.20 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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