19th Jan 2015 11:55
LONDON (Alliance News) - Vedanta Resources PLC Monday said its subsidiary Hindustan Zinc Ltd, which operates in India, reported its "highest ever net profit" during the third quarter after production and revenue both rose.
Vedanta holds a 55% stake in Indian listed Sesa Sterlite Ltd, which holds a 64.9% interest in Hindustan Zinc, with the government of India holding the remaining balance.
The zinc miner recorded its "highest ever net profit" during the third quarter ended December 31, 2014, which increased by 38% to INR23.79 billion in the third quarter compared to INR17.23 billion a year earlier, Vedanta said. The increase was driven by higher unrefined zinc, lead and silver volumes in the period, partly offset by lower refined zinc volumes and lower silver prices.
Revenue totalled INR38.04 billion in the third quarter, up 12% from INR34.10 billion in the third quarter of 2013.
Earnings before interest, taxes, depreciation, and amortization rose by 14% in the quarter to INR20.89 billion from INR18.28 billion, caused by the increase in revenue and lower cost of production.
At the end of the period, the company reported a cash balance of INR289.80 billion.
Mined metal production rose by 10% year on year during the quarter to 242,417 metric tonnes compared to 220,126 tonnes. Production rose after higher production was achieved from the Rampura Agucha mine and higher ore grades.
For the nine month period ending December 31, Hindustan produced 618,123 metric tonnes compared to 679,597 tonnes for the full year of 2014. Hindustan is expecting the shortfall to be made up in the fourth quarter.
Integrated refined zinc production decreased 2% year on year to 191,785 metric tonnes due to higher cathode stock.
Production of integrated refined lead was flat from 2013, whilst saleable integrated silver production down 4% to 70 metric tonnes. Hindustan said full year production will be fairly flat from 2013 as production is expected to improve in the fourth quarter.
The zinc metal cost of production before royalties dropped by 3% from 2013 to USD817 due to higher mined metal production, lower diesel cost and higher acid credits, partly offset by lower linkage coal and increased employee expense on account of a long-term wage agreement, it said.
"Zinc market fundamentals are favourable, and we remain committed to increasing production and controlling costs to drive profitability of our operations. Looking ahead, we believe that opportunities lie in our ability to execute against our long-term strategic priorities, which will continue to differentiate Hindustan Zinc and drive shareholder value," said Agnivesh Agarwal, chairman of Hindustan.
Vedanta shares were down 3.1% to 392.80 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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