20th Jul 2006 07:01
Vedanta Resources PLC20 July 2006 20 July 2006 Vedanta Resources plc Unaudited Results for the First Quarter ended 30 June 2006 Highlights• Revenues and EBITDA of $1,285.5 million and $589.1 million, respectively• Record production of aluminium and zinc• Expansion projects on schedule Performance Summary First quarter revenues were $1,285.5 million, up 113% compared to thecorresponding quarter last year, driven by better price realisations and anincrease in volumes. EBITDA increased to $589.1 million, up 280%. The increasein EBITDA was partially offset by increased costs due to high input prices androyalties which are linked to LME prices. Sales across all metals were lowerthan production during the quarter due to the seasonal build up of inventory bydomestic customers. Underlying demand for all our commodities remains strong andwe expect current stocks to be liquidated during the year. Our phase 2 expansionprojects are progressing on schedule with orders for critical equipment andpackages being placed. We continue to experience challenges at KCM and measuresto address plant availability and related issues are being progressed. Aluminium The existing plants at BALCO and MALCO continue to operate near rated capacity,in line with our expectations. The new Korba smelter (Plant II) produced 42,000tonnes during the quarter as compared with 33,000 tonnes in the immediatelypreceding quarter. Revenues were $157.8 million as compared to $73.3 million in the correspondingperiod last year on account of plant II metal availability and higher pricerealisations. EBITDA was $66.1 million as compared to $17.7 million in thecorresponding period last year. However, as experienced by other producers,higher prices of alumina, caustic and carbon have increased costs marginally.There was an inventory build-up of 13,000 tonnes of metal during the quarter. As previously announced in May, production at Plant II was temporarily affecteddue to the power plant being tripped. The process of re-commissioning is wellestablished and good progress is being made. We expect to complete commissioningof all pots by the end of September 2006. While production for the year is estimated to be lower by approximately 25,000 tonnes than originally envisaged,the financial impact for FY 2007 is marginal due to the export of additionalsurplus power. The 1-1.4 mtpa alumina refinery at Lanjigarh, Orissa is progressing well and weexpect to achieve mechanical completion by the end of the second quarter of thecurrent financial year. As previously stated, in respect of the bauxite mine, thematter is still under the consideration of the Ministry of Environment andForests. Engineering work for the green-field 500,000 tpa aluminium smelter andassociated 1,215 MW captive power plant in Jharsuguda, Orissa is progressingwell and orders for critical equipments have been awarded. During the quarter, MALCO won a prestigious award from the Tata Energy ResearchInstitute in recognition of its environmental management practices andinnovative initiatives. Copper - India & Australia The Tuticorin smelter is performing at close to rated capacity and in line withour expectations. Copper cathode production during the quarter was 57,000 tonnesas compared to 56,000 tonnes in the corresponding quarter last year. Productionwas lower than rated capacity due to a planned maintenance shutdown of 21 daysin April 2006. Mined metal production at our Australian mines was 8,000 tonnes as per planduring the quarter as compared with 10,000 tonnes in the corresponding quarterlast year due to the planned closure of Thalanga Copper Mines in the secondquarter of FY 2006. Revenue was $472.7 million as compared to $234.4 million in the correspondingprior quarter, primarily due to higher metal prices. EBITDA was $115.2 millionas compared to $33.2 million in the corresponding prior quarter, due to higherLME prices and improved TC/RC realisation, partially offset by higher inputprices of fuel. During the quarter, cathodes produced by the Tuticorin smelter were approved asa brand by the LME, making us the first Indian company with 100% LMEregistration on all our Indian copper brands. Copper - Zambia During the quarter, we produced 39,000 tonnes of copper cathode at KCM ascompared with 43,000 tonnes in the corresponding quarter last year, which waslower than our expectations. Copper production at KCM was lower because of lowhead-grade ore, lower recoveries due to a change in mineralogy and equipmentavailability. This together with high input prices continues to have anunfavourable impact on operating costs. Revenue was $253.1 million as compared to $154.2 million in the correspondingprior quarter, primarily due to higher metal prices. EBITDA was $126.0 millionas compared to $49.8 million in the corresponding prior quarter as higher metalprices were partially offset by the impact of lower production volumes andhigher operating costs. The Nkana smelter will be partially shutdown for planned routine maintenance inAugust 2006. Progress on the KDMP expansion project and the Nchanga smelter remainssatisfactory with orders for major packages such as the concentrator, shafts andother long-lead items having been placed. Zinc Mined metal production was 131,000 tonnes for the quarter, an increase of 15%over output in the corresponding quarter last year, primarily due to theincreased output from Rampura Agucha mines. Refined zinc production was 82,000tonnes during the quarter as compared with 57,000 tonnes produced in thecorresponding quarter last year, mainly due to production from the new hydrosmelter. There was an inventory build-up of 15,000 tonnes during the quarter. Sales during the quarter were augmented by the export of 56,000 dry metrictonnes of surplus zinc concentrate. Revenue was $353.6 million as compared to $120.9 million in the correspondingquarter last year, primarily due to higher metal prices and higher volumes fromthe new plant. EBITDA was $279.4 million as compared to $53.1 million in thecorresponding quarter last year, primarily due to higher prices and metalvolumes, as well as a reduction in unit operating costs mainly due to operatingefficiencies achieved at the new captive power plant which more than offsethigher royalties linked to LME prices. During the month of July 2006, the Chanderiya pyro smelter was under shutdownfor a period of 11 days for planned routine maintenance and has now recommencedproduction. Work on the new 170,000 tpa Chanderiya Phase II hydro smelter is progressingsatisfactorily. Basic engineering and 80% of the ordering is now complete andthe plant is on course for expected completion early in 2008. Production Summary (Unaudited) (in 000'tonnes, except as stated) % Change Q1 FY 2007 vs. Q1 FY 2007 Q1 FY 2006 Q1 FY 2006 FY 2006Alumina 73 71 2.8% 296Aluminium 76 36 111.1% 210Copper - India/Australia Mined metal content 8 10 (20.0)% 34 Copper - Cathode 57 56 1.8% 273 Copper - Rods 40 39 2.6% 167Copper - Zambia Mined metal content 18 25 (28.0)% 99 Copper - Cathode 39 43 (9.3)% 164Zinc - Mined Metal Content 131 114 14.9% 472Refined Zinc 82 57 43.9% 284 Financial Summary (Unaudited) (in $ million, except as stated) % Change Q1 FY 2007 vs. Q1 FY 2007 Q1 FY 2006 Q1 FY 2006 FY 2006 Revenue Aluminium 157.8 73.3 115.3% 453.0 Copper India/Australia 472.7 234.4 101.7% 1,537.9 Zambia 253.1 154.2 64.1% 703.4 Zinc 353.6 120.9 192.5% 875.5 Others 48.3 20.6 134.5% 132.0Total 1,285.5 603.4 113.0% 3,701.8 EBITDA Aluminium 66.1 17.7 273.4% 135.3 Copper India/Australia 115.2 33.2 247.0% 219.0 Zambia 126.0 49.8 153.0% 206.3 Zinc 279.4 53.1 426.2% 532.9 Others 2.4 1.3 84.6% 8.0Total 589.1 155.1 279.8% 1,101.5 For further information, please contact: Sumanth Cidambi [email protected] Director - Investor Relations Tel: +44 20 7659 4732 / +91 22 6646 1531Vedanta Resources plc Faeth Birch Tel: +44 20 7251 3801Robin WalkerFinsbury About Vedanta Resources plcVedanta Resources plc is a London listed diversified metals and mining group.Its principal operations are located throughout India, with further operationsin Zambia and Australia. The major metals produced are aluminium, copper, zincand lead. For further information, please visit www.vedantaresources.com. DisclaimerThis press release contains "forward-looking statements" - that is, statementsrelated to future, not past, events. In this context, forward-looking statementsoften address our expected future business and financial performance, and oftencontain words such as "expects," "anticipates," "intends," "plans," "believes,""seeks," "should" or "will." Forward-looking statements by their nature addressmatters that are, to different degrees, uncertain. For us, uncertainties arisefrom the behaviour of financial and metals markets including the London MetalExchange, fluctuations in interest and or exchange rates and metal prices; fromfuture integration of acquired businesses; and from numerous other matters ofnational, regional and global scale, including those of a political, economic,business, competitive or regulatory nature. These uncertainties may cause ouractual future results to be materially different that those expressed in ourforward-looking statements. We do not undertake to update our forward-lookingstatements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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