15th May 2014 07:22
LONDON (Alliance News) - Vedanta Resources PLC Thursday said its pretax profit fell in its full year as higher costs at its subsidiary Sesa Sterlite and a drop in revenues due to lower commodity prices, increased payments to the government of India, and lower production from its Konkola Copper Mine and Zinc International operations hit the company.
The India focused-oil and metals company said its pretax profit fell 35% to USD1.12 billion for the twelve months ended March 31 from USD1.72 billion the previous year, as revenues fell 12% to USD12.95 billion from USD14.64 billion.
The company said its revenues fell due to weaker global commodity and oil prices along with an increased rate in the share of its petroleum profits having to be provided to the government of India.
Vedanta said it also experienced lower production volumes at its Konkola Copper Mine and Zinc International and Iron Ore operations, where state-wide bans on mining in Karnataka and Goa were only lifted in December 2013 and April 2014, respectively.
The company said finance costs rose to USD1.36 billion from USD1.19 billion due mainly to non capitalisation of the company's interest in the Jharsuguda Plant 2 due to a delay in commissioning.
Despite this, Vedanta announced its final dividend of USD39 cents, an increase of 5.4% as compared to USD37 cents the previous year.
The news comes after the company announced in April that net profit at its subsidiary Sesa Sterlite Ltd fell in its full year despite improved revenues and results from its fourth quarter as costs hit the company.
The company said Sesa Sterlite's net profit fell 16% to INR123.47 billion in its full year ended March 31 from INR146.25 billion the previous year, as the company's finance costs increased to INR61.11 billion from INR46.64 billions.
Sesa said its net profit was lower due to higher depreciation and amortisation, plus higher finance costs and lower other income then previously.
Separately in April, the company said it failed to reach its revised mined metal production estimate in the financial year at its Zinc India operations, but posted strong full-year production of oil and gas due to the ramp-up of operations at its Rajasthan Block.
In January, the India-focused oil and metals company warned that it expected mined metal production at its Zinc India operations to be about 900,000 tonnes due to a slower-than-expected ramp up of its underground mining project and a change in mining sequence that is giving preference to primary mine development.
However, in April the company said it had failed to meet this revised estimate, achieving 880,000 tonnes, a 1% increase on its 870,000 tonnes the previous year.
In contrast Vedanta achieved strong production from its Oil & Gas operations, where average daily gross operated production increased 6% to 218,651 barrels of oil equivalent per day from 205,323 barrels, and average daily working interest production increased 7% to 137,127 barrels of oil equivalent per day from 127,843 barrels previously.
The company said its total working-interest oil and gas produced during the period increased 7% to 50.1 million barrels of oil equivalent from 46.7 million barrels of oil equivalent, as its Rajasthan block achieved landmark oil production of 200 million barrels and 200,000 barrels of oil equivalent per day in March 2014.
Earlier in April, Tom Albanese took over as chief executive officer at Vedanta, a move that marked his return to the helm of a major mining company just a year after he quit Rio Tinto PLC when the mining giant swung to net loss amid an industry-wide downturn.
Albanese, who was one a several high-profile victims of the downturn that struck the mining industry in late 2012 and early 2013, joined Vedanta's board in April after taking over from MS Mehta, who retired at the end of March.
"Building on these results, as a major global diversified natural resources company, we continue to focus on delivering value for our shareholders through operational excellence, exploration upside and increasing cash flows from our well-invested assets," Chairman Anil Agarwal said in a statement.
Vedanta Resources shares were down 4.0% to 945.50 pence, putting it top of the FTSE 250 fallers during early trading on Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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