19th Jan 2006 07:01
Vedanta Resources PLC19 January 2006 19 January 2006 Vedanta Resources plc Unaudited Results for the Third Quarter and Nine Months Ended 31 December 2005 Highlights • Third quarter and nine month revenues of $974.7 million and $2,359.3 million, up 78% and 92%, respectively• Third quarter and nine month EBITDA of $264.6 million and $601.1 million, up 121% and 115%, respectively• Higher production volumes across all metals in Q3 - Aluminium: 60,000 tonnes, up 77% - Copper - India: 75,000 tonnes, up 60% - Zinc: 69,000 tonnes, up 26% • Third quarter revenue and EBITDA 25% and 46% higher respectively than the preceding quarter. "Higher production volumes together with rising metal prices have contributed tothe strong set of third quarter results." said Anil Agarwal, Executive Chairman,Vedanta Resources plc. "Our growth projects are all on track and we continue toimprove on our volumes and efficiencies." Performance Summary For the third quarter and the nine months period ended 31 December 2005, grouprevenues were $974.7 million and $2,359.3 million respectively, an increase of78% and 92%, compared with revenues of $548.6 million and $1,226.0 millionduring the corresponding periods in the prior year. EBITDA was $264.6 million and $601.1 million for the third quarter and the ninemonths period ended 31 December 2005 respectively, an increase of 121% and 115%,compared with EBITDA of $120.0 million and $280.0 million during thecorresponding periods in the prior year. Revenues and EBITDA rose primarily due to higher prices and volume growth acrossall our metals. A total of 144 pots have been commissioned at the new aluminium smelter atKorba. Three out of four captive power plant units are online and the fourthunit is expected to be online in the fourth quarter. The ramp up of the 170,000tpa zinc smelter at Chanderiya is progressing on schedule. During the quarter, our Board approved a US$2.1 billion green-field 500,000 tpaaluminium smelter project together with an associated 1,215 MW captive thermalpower plant in Jharsuguda, Orissa as well as a $125 million expansion of KCM'sNkana smelter to increase smelting capacity in Zambia to 300,000 tpa. Aluminium Business During the quarter, the existing production facilities at BALCO and MALCOcontinued to operate at their rated capacities. The total production of 60,000tonnes during the quarter was 14,000 tonnes higher than the preceding quarterand 26,000 tonnes higher than the corresponding period in the prior year. Thirdquarter production included 24,000 tonnes produced from the new Korba smelter,where a total of 144 out of 288 pots have been commissioned, by December 2005. Revenues were $117.0 million and $272.8 million for the third quarter and thenine months period ended 31 December 2005 respectively, an increase of 61% and40%, compared with revenues of $72.5 million and $195.3 million during thecorresponding periods in the prior year. The increase in revenue is attributableto higher metal prices and increased volumes. EBITDA was $32.1 million and $69.7 million for the third quarter and the ninemonths period ended 31 December 2005 respectively, an increase of 95% and 39%,compared with EBITDA of $16.5 million and $50.3 million during the correspondingperiods in the prior year. The increase in EBITDA is due to the increase inrevenues, partly offset by higher energy and certain other input costs. The 1-1.4 mtpa alumina refinery project in Lanjigarh, Orissa is proceeding wellwith mechanical completion expected by mid 2006. Out of the budgeted $800million, an amount of $326 million has been spent by December 2005. Further tothe report submitted by the committee appointed by the Supreme Court of India,the Government of Orissa and other concerned parties are in the process ofsubmitting their responses, which will lead to further directions in thismatter. Copper Business The strong ramp up of the Tuticorin smelter was evidenced by higher copperproduction of 75,000 tonnes during the current quarter which was 7,000 tonneshigher than the preceding quarter and 28,000 tonnes higher than thecorresponding period in the prior year. Despite closure of the Thalanga Copper Mines, production levels have largelyremained unaffected due to improved operational efficiencies at the Copper Minesof Tasmania's Mt. Lyell operations which continues to be the source ofapproximately 11% of total concentrate requirement in India. Revenues for Copper - India/Australia operations were $448.0 million and$1,044.4 million for the third quarter and the nine months period ended31 December 2005 respectively, an increase of 98% and 93%, compared withrevenues of $225.7 million and $542.5 million during the corresponding periodsin the prior year. The increase in revenue is attributable to higher metalprices and increased volumes. EBITDA for Copper - India/Australia operations was $56.9 million and$138.4 million for the third quarter and the nine months period ended31 December 2005 respectively, an increase of 95% and 99%, compared with EBITDAof $29.2 million and $69.7 million during the corresponding periods in the prioryear. EBITDA has increased during the current quarter due to improved TC/RCstogether with better metal recoveries and by-product management, partly offsetby an increase in energy costs and a reduction in tariffs. Revenues for Copper - Zambia(1) operations were $188.1 million and$493.1 million for the third quarter and the nine months period ended31 December 2005 respectively. EBITDA for Copper - Zambia operations was$56.8 million and $147.1 million for the third quarter and the nine monthsperiod ended 31 December 2005 respectively. Q3 revenues and EBITDA were 25% and40% higher than the preceding quarter. During the quarter, we experienced increased labour and energy costs in KCMcompared with the preceding quarter. Labour costs were higher due to a recentlyconcluded wage settlement reached with employees during the period. Energy costsincreased due to fuel imports during the quarter. The commissioning of thesulphur-based acid plant in the fourth quarter, the ongoing monitoring ofcontrollable costs and the gradual increase in production volumes are expectedto have a favourable impact on unit costs going forward. (1) Prior period comparatives for Copper - Zambia relate to the eight week period post acquisition of KCM on 5 November 2004. Changes over prior period are not disclosed as the comparison will not be meaningful. Zinc Business Total zinc produced was 69,000 tonnes during the current quarter which was3,000 tonnes higher than the preceding quarter and 14,000 tonnes higher than thecorresponding period in the prior year. Production in the current quarterincludes production of 15,000 tonnes from the newly commissioned smelter. Salesduring the quarter were augmented by exports of 65,000 tonnes of zincconcentrate. Revenues were $202.5 million and $474.4 million for the third quarter and thenine months period ended 31 December 2005 respectively, an increase of 60% and47%, compared with revenues of $126.4 million and $322.4 million during thecorresponding periods in the prior year. The increase in revenue is attributableto higher metal prices and increased volumes. EBITDA was $117.7 million and $241.7 million for the third quarter and the ninemonths period ended 31 December 2005 respectively, an increase of 129% and 77%,compared with EBITDA of $51.5 million and $135.3 million during thecorresponding periods in the prior year. The increase in EBITDA is due to theincrease in revenues combined with a marginal decrease in unit costs ofproduction. Unit costs of production were lower during the quarter on account ofsavings in energy costs arising from our captive power facilities, in partoffset by an increase in royalties due to higher metal prices. Work on our new 50,000 tpa lead plant is progressing satisfactorily and isexpected to be completed in the fourth quarter of the current financial year. Growth Projects During the quarter, our Board also approved a $2.1 billion green-field500,000 tpa aluminium smelter project together with an associated 1,215 MWcaptive thermal power plant in Jharsuguda, Orissa in India. Preparatory work interms of vendor selection and ordering equipment has commenced. Preliminary work on the $400 million Konkola Deep Mines expansion project toincrease copper ore output at KCM commenced during the third quarter. Shortlisting of vendors for civil and mechanical contracts for the $125 million Nkanasmelter expansion project has also started. Preliminary work on the new 170,000 zinc smelter project at Chanderiya hascommenced with construction orders currently being placed with suppliers. Financial Summary (Unaudited) (in $ million, except as stated) Q 3 Q 2 9 months % 2005-06 2004-05** % change 2005-06 2005-06 2004-05** changeRevenue Aluminium 117.0 72.5 61.4% 82.5 272.8 195.3 39.7% Copper Copper -India/Australia 448.0 225.7 98.5% 362.1 1,044.4 542.5 92.5% Copper - Zambia* 188.1 100.0 NA 150.7 493.1 100.0 NA Zinc 202.5 126.4 60.2% 151.0 474.4 322.4 47.1% Other 19.1 24.0 (20.4%) 34.9 74.6 65.8 13.4%Total 974.7 548.6 77.7% 781.2 2,359.3 1,226.0 92.4% EBITDA Aluminium 32.1 16.5 94.5% 19.9 69.7 50.3 38.6% Copper Copper - India/Australia 56.9 29.2 94.9% 48.3 138.4 69.7 98.6% Copper -Zambia* 56.8 26.0 NA 40.5 147.1 26.0 NA Zinc 117.7 51.5 128.5% 70.9 241.7 135.3 78.6%Other 1.1 (3.2) NA 1.8 4.2 (1.3) NATotal 264.6 120.0 120.5% 181.4 601.1 280.0 114.7% Production Summary (Unaudited) (in '000 tonnes, except as stated) Q 3 Q 2 9 months 2005-06 2004-05 % change 2005-06 2005-06 2004-05 % changeAlumina 78 79 (1.3%) 71 220 209 5.3%Aluminium 60 34 76.5% 46 142 100 42.0%Copper - India/Australia Mined metal content 8 8 - 8 26 28 (7.1%) Copper - Cathode 75 47 59.6% 68 198 125 58.4% Copper - Rods 41 34 20.6% 41 121 86 40.7%Copper - Zambia * Mined metal content 28 16 NA 29 83 16 NA Copper - Cathode 46 29 NA 38 127 29 NA Zinc - Mined Metal Content 127 89 42.7% 106 347 256 35.5%Refined Zinc 69 55 25.5% 66 192 158 21.5% * Prior period comparatives for Copper - Zambia relate to the eight week period post acquisition of KCM on 5 November 2004. Changes over prior period are not disclosed as the comparison will not be meaningful.** amounts for 2004-05 are presented on a UK GAAP basis For further information, please contact: Sumanth Cidambi [email protected] Associate Director - Investor Relations Tel: +91 22 5646 1531 Vedanta Resources plc Faeth Birch Tel: +44 20 7251 3801 Robin Walker Finsbury About Vedanta Resources plc Vedanta 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. Disclaimer This 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," or "will." Forward-looking statements by their nature address mattersthat are, to different degrees, uncertain. For us, uncertainties arise from thebehaviour of financial and metals markets including the London Metal Exchange,fluctuations in interest and or exchange rates and metal prices; from futureintegration of acquired businesses; and from numerous other matters of national,regional and global scale, including those of a political, economic, business,competitive or regulatory nature. These uncertainties may cause our actualfuture results to be materially different that those expressed in ourforward-looking statements. We do not undertake to update our forward-lookingstatements. 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