15th Jan 2007 07:01
Vedanta Resources PLC15 January 2007 15 January 2007 Vedanta Resources Plc Unaudited Results for the Third Quarter and Nine Months Ended 31 December 2006 Highlights • Revenues and EBITDA of $1,760 million and $724 million, up 81% and 174%, respectively • Record EBITDA of over $2 billion in the nine months ended 31 December 2006 • New BALCO smelter achieves production at full capacity levels • Aluminium, zinc and copper production in India significantly higher than in preceding quarter and in the corresponding period last year Performance Summary Third quarter ("Q3") revenues were $1, 760.4 million, up 80.6% compared to thecorresponding quarter last year, driven by higher volumes and better pricerealisations. EBITDA achieved a record high of $724.3 million in Q3 and$2,014.8 million in the nine months ended 31 December 2006, representing anincrease of 173.7% quarter-on-quarter and 235.2% year-to date. Production across all metals in India was significantly higher than thepreceding quarter and in the corresponding prior quarter mainly because ofcontribution from newly commissioned projects. Aluminium Production at the new Korba II smelter has fully stabilised and reached its fullcapacity, after the temporary disruption of pots in May last year due to thetripping of the power plant. The plant produced over 61,000 tonnes of cast metalthis quarter compared to 44,000 tonnes in the immediately preceding quarter,equivalent to an annual capacity of 245,000tpa. The existing smelters at BALCOand MALCO produced about 37,000 tonnes this quarter, in line with their ratedcapacity. The captive power plant at Korba continues to operate satisfactorilyand has achieved its highest level of generation in the current quarter, whichhad a positive impact on costs. Q3 revenues were $279.7 million as compared with $117.0 million in thecorresponding period last year on account of higher volumes and better pricerealisations. We continue to develop the export market, mainly in South EastAsia and the Middle East, supported by additional volumes from the new smelter. Q3 EBITDA was $128.8 million, an increase of 301.2% over the corresponding priorquarter. Unit cash costs in both plants of BALCO have improved over theimmediately preceding quarter mainly due to higher production volumes andreduced power costs, which offset increases in other input costs. The decline inglobal alumina prices has started having a positive impact on costs. We have obtained the LME registration for the aluminium ingots of the new Korbasmelter under the brand "BHARATAL". Copper - India and Australia Copper cathode production during Q3 was the highest ever at 86,000 tonnes anincrease of 6,000 tonnes from the immediately preceding quarter mainly due tothe debottlenecking initiatives at the Tuticorin smelter, which has increasedcapacity to 400,000 tpa. Production is being steadily ramped up and we expect torealise rated capacity volumes in the fourth quarter. Mined metal production atour Australian mines of about 7,000 tonnes is almost at the same level as thecorresponding prior period. Q3 revenues were $717.5 million as compared with $448.0 million in thecorresponding prior period, primarily due to higher volumes and higher metalprices. Q3 EBITDA was $92.4 million as compared with $56.9 million in thecorresponding prior quarter, an increase of 62.4% due to higher volumes,improved TCRC realisation and higher LME prices. As reported earlier, the reduction in TCRC realisations has started having anegative impact on EBITDA due to global softening and we expect furtherreduction in TCRCs in the fourth quarter The Indian copper operations have been awarded the "Best performance award innon-ferrous metals" by the Indian Institute of Metals. It has also won theCorporate Silver Award for Manufacturing Excellence in the Metals Category(Large Facilities) at the India Manufacturing Excellence Awards 2006 awarded byFrost & Sullivan. Copper - Zambia During the quarter, KCM produced 35,000 tonnes of copper cathode as comparedwith 31,000 tonnes in the immediately preceding quarter but lower than ourexpectations. Cathode production at the leaching plant and mining productionfrom Nchanga were affected by unforeseen environmental issues. While theseissues have now been satisfactorily resolved, steady and cautious steps are nowbeing taken to bring the leaching plant back to its normal levels of production.Several debottlenecking measures at the Nkana smelter have enabled us to achievea record anode production of about 12,000 tonnes in December 2006. Q3 revenues were $211.4 million as compared with $188.1 million in thecorresponding prior quarter primarily due to higher prices. Q3 EBITDA was$79.4 million as compared with $56.8 million, an increase of 39.8%. Operatingcosts are still high primarily due to lower mine output and its consequentimpact on production volumes, together with higher maintenance costs incurreddue to the unforeseen shutdown. Zinc The production of mined metal of 128,000 tonnes in Q3 was maintained at thelevels achieved in the corresponding prior period and higher than that of theimmediately preceding quarter by 4,000 tonnes. Production of refined zinc at93,000 tonnes was up from 79,000 tonnes in the preceding quarter an increase of17.7% and was significantly higher than the corresponding prior quarter by24,000 tonnes an increase of 34.8%. Volumes have increased mainly from theramping up of the new hydro smelter and going forward in the fourth quarter, weexpect to produce close to our rated capacity of 400,000 tpa. While production levels have improved significantly over the immediatelypreceding quarter, sales of refined zinc have remained at similar levelscompared with Q2, primarily due to a liquidation of Q1 inventories in Q2. In view of better metal production during the current quarter, sale of zincconcentrate was restricted to 38,000 dry metric tonnes. We sold 29,000 drymetric tonnes of lead concentrate. Revenue was $549.6 million as compared with $202.5 million in the correspondingquarter last year, primarily due to higher volumes from the new plant and highermetal prices. EBITDA was $425.2 million as compared with $117.7 million, anincrease of 261.3% over the corresponding quarter last year primarily due tohigher volumes and higher prices. The National Energy Conservation Award, awarded by the Ministry of Power,Government of India, in the mineral sector has been awarded to one of the zincmines. Projects Update The alumina refinery at Lanjigarh is in the final commissioning stage and isexpected to be commissioned by March 2007. The Central Ministry of Environmentand Forests have received reports from its various sub-committees and isexpected to give its recommendations shortly to the Supreme Court on the issueof environmental clearances for developing the Lanjigarh bauxite deposits. Weare hopeful of a positive resolution of this matter in the near future. The debottlenecking project of the Tuticorin smelter to increase its capacityfrom 300,000 tpa to 400,000 tpa has been completed and the smelter is steadilyramping up. We expect to realise full volumes from the smelter in the fourthquarter. Progress on both the Konkola Deep Mining Project and the 250,000 tpa Nchangasmelter project is satisfactory and are on course for completion as scheduled.All major orders have been placed, basic engineering has been completed and sitework is progressing in full swing. Work on the new 170,000 tpa zinc smelter at Chanderiya is progressing well withorders for all major lead items placed and construction activity is in fullswing. The project is on track and is expected to be completed by early 2008. Wehave also initiated a debottlenecking project at the Chanderiya and Debari zincsmelters to enhance their capacity by an additional 88,000 tpa. This project isestimated to cost $169 million and is scheduled for completion by mid 2008. The greenfield 500,000 tpa smelter at Jharsuguda is progressing well with allmajor orders placed and is on schedule for completion as announced. Preliminary work on the new $1.9 billion greenfield 2400 MW integrated powerproject at Jharsuguda has recently commenced. The progress on the project issatisfactory and a major EPC order for the construction of the power plant hasbeen placed. Hindustan Zinc Limited is investing in a Wind Power project with a capacity of75 MW at an approximate cost of $87 million. Orders have been placed for majorequipment. The project will be progressively commissioned towards end of thiscalendar year. Production Summary (Unaudited) (in '000 tonnes, except as stated) Q31 Q21 Nine Months* 2006-07 2005-06 Change 2006-07 2006-07 2005-06 Change-------------------------------------------------------------------------------Alumina 69 78 -11.5% 77 220 220 -Aluminium 98 60 63.3% 79 253 142 78.2%Copper India/AustraliaMined metal content 7 8 -12.5% 7 22 26 -15.4%Copper - Cathode 86 75 14.7% 80 224 198 13.1%Copper - Rods 41 41 - 47 127 121 5.0%Copper ZambiaMined metal content 21 28 -25.0% 25 65 83 -21.7%Copper - Cathode 35 46 -23.9% 31 105 127 -17.3%Zinc - Mined Metal 128 127 0.8% 124 384 347 10.7%ContentRefined Zinc 93 69 34.8% 79 253 192 31.8%Equivalent Gold (oz)** 12,911 2,828 * Q3 - third quarter ended 31 December 2006 and 2005, respectively, Q2 - Second quarter ended 30 September 2006, Nine Months - Nine month period ended 31 December 2006 and 2005, respectively ** Quantities of equivalent gold represent production in Q3 and in Q2 for the post acquisition period of one month to 30 September 2006, and are not directly comparable with the corresponding prior periods Financial Summary (Unaudited) (in $ million, except as stated) Q31 Q21 Nine Months1Revenue 2006-07 2005-06 Change 2006-07 2006-07 2005-06 Change--------------------------------------------------------------------------------Aluminium 279.7 117.0 139.1% 238.4 675.9 272.8 147.8%CopperCopper - India/ 717.5 448.0 60.2% 717.5 1,907.7 1,044.4 82.7%AustraliaCopper Zambia 211.4 188.1 12.4% 235.1 699.6 493.1 41.9%Zinc 549.6 202.5 171.4% 527.9 1,431.1 474.4 201.7%Others 2.2 19.1 (88.5%) 0.1 50.6 74.6 (32.2%)Total 1,760.4 974.7 80.6% 1,719.0 4,764.9 2,359.3 102.0% EBITDAAluminium 128.8 32.1 301.2% 70.3 265.2 69.7 280.5%Copper Copper - India/ 92.4 56.9 62.4% 96.5 304.1 138.4 119.7%AustraliaCopper Zambia 79.4 56.8 39.8% 118.4 323.8 147.1 120.1%Zinc 425.2 117.7 261.3% 424.1 1,128.7 241.7 367.0%Others (1.5) 1.1 - (7.9) (7.0) 4.2 -Total 724.3 264.6 173.7% 701.4 2,014.8 601.1 235.2% * Q3 - third quarter ended 31 December 2006 and 2005, respectively, Q2 - Second quarter ended 30 September 2006, Nine Months - Nine month period ended 31 December 2006 and 2005, respectively For further information, please contact:Sumanth Cidambi [email protected] Director - Investor Relations Tel: +44 20 7659 4732/+91 22 6646 1531Vedanta Resources plc James Murgatroyd Tel: +44 20 7251 3801Robin WalkerFinsbury 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, Australia and Armenia. The major metals produced are aluminium,copper, zinc, lead and gold. For further information, please visitwww.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," "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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