28th Jan 2005 14:00
Vedanta Resources PLC28 January 2005 28th January 2005 Vedanta Resources plc Results for the 3rd quarter and 9 months ended 31 December 2004 Highlights: •Group EBITDA of US$120m* - including a contribution of US$26m* EBITDA from Konkola Copper Mines plc ("KCM") •Third quarter EBITDA +28%, 9 months EBITDA +21% over previous year •Successful US$600m bond issue - expansion projects fully funded •Solid progress on US$2.2bn growth projects -capital expenditure of US$876m since listing Summary The total EBITDA for the period is a record US$120m*. This includes a maidencontribution from KCM, acquired on 5 November 2004, which is expected tocontribute US$26m* underlying EBITDA. Over 9 months, EBITDA on existing operations has risen by 10% to US$254m. Highermetals prices have been a major positive factor, assisted by some volume gains.This has been offset by the tariff cuts in 2004, which affected each of ourmetals and have reduced earnings by around US$45m over 9 months. Energy prices,mentioned in our interim results, continue to be a feature but appear to havestabilised at current levels. The third quarter is broadly in line with thecorresponding quarter of last year at US$94m, but significantly higher than inthe second quarter of 2005. This quarter we passed a significant milestone with the successful issuance of aUS$600m bond. At the end of the period, including KCM, we had net debt for thefirst time of US$10m. This followed total capital expenditure of US$582m for theyear to date, an increase from $370m at the half year. Good progress has been made on all the growth projects. The expanded project atHindustan Zinc is moving towards the final stage and remains on track forcommissioning in June 2005. In the aluminium expansion at BALCO, mechanicalcompletion is at an advanced stage. The Copper expansion project at Tuticorin iscomplete and we continue to wait for final environmental clearance. Anil Agarwal. Chief Executive of Vedanta commented: "We are delighted to be including KCM in our results for the first time andwelcome them to the Vedanta group. We are excited by the many opportunities todevelop the business and improve returns. The Group has shown solid profitprogression this year, building in line with our expectations and we remainconfident of delivering good progress on last year." * All figures for KCM relate to the eight week period post acquisition, on 5/11/04. These numbers are subject to post acquisition audit and may be adjusted. Aluminium The plants at MALCO and BALCO are operating at full capacity with limited roomto raise production numbers at this stage. Production in the third quarter ofthe current financial year is in line with the first two quarters of the yearand EBITDA continues to run above the levels of the last financial year. Betterprices and improved product mix have been partly offset by rising input costs,including energy and water costs, as mentioned at the interim results. The expansion at BALCO will take our total annual capacity from 135,000 tpa tonearly 400,000 tpa. We remain on schedule to test some of the new pots, usingimported anodes and power, and for commissioning in March 2006. The alumina project in Orissa is proceeding according to plan, with orders for amajority of the packages placed with suppliers and the civil engineering workprogressing satisfactorily. Copper - Existing Operations Copper cathode production in the third quarter was 7% higher than thecorresponding period for last year and copper rod production has fully recoveredfrom the lower levels of the first half. Production of copper concentrate in theAustralian mines was affected by short term operational issues, which have nowbeen resolved. EBITDA at the Sterlite copper business has increased sharply from the first twoquarters of the financial year. This has been driven by improved volumes andlower unit costs. The third quarter saw limited improvement in TC/RC terms, butfurther benefits from this should be felt in the current quarter. The expanded facilities at Tuticorin are still awaiting final environmentalclearance and are ready to start production as soon as this is received. Aspreviously mentioned, we assume limited production from the expanded facility inthe current financial year. In line with the changes to import tariffs last year, the Government of Indiathis month reduced the assistance on copper exports by around 50%. We estimatethat this will reduce earnings by approximately US$5m in the remaining twomonths of this financial year. Copper - Zambia A 51% holding in KCM was acquired on 5 November 2004. The numbers for KCMprovided in this release are subject to audit and may lead to adjustmentsarising from the acquisition. We anticipate that for the 8 week period from 5November to 31 December, underlying EBITDA should be US$26m. We believe KCM offers significant opportunities to improve returns and developthe assets. Production costs remain high, at around 85 US cents per pound, andour aim remains to stabilise and improve returns on the existing assets and thento assess the many options that KCM offers for future growth. Zinc The production of zinc at our smelters was broadly in line with the thirdquarter of last year. Sales were augmented by tolled smelting of our zincconcentrate and there were exports of some surplus zinc and lead concentrate. Higher zinc and lead prices, along with the sale of additional concentrates,have led to the strong rise in EBITDA, which has more than offset the reductionsin tariffs. Energy costs remain higher than last year, but are in line with thefirst half of the financial year. The expansion project at the Chanderiya smelter is progressing well and is ontrack for commissioning in June 2005, in line with previous guidance. At theRampura Agucha mines, most of the new mining equipment has been commissioned andwe plan to commission the new roaster in the current quarter. Financials : Financial Summary (US$m) Q3 (1) 9 months 2004-05 2003-04 % change 2004-05 2003-04 %change Turnover:Aluminium 72.5 - - 195.3 - -Copper 225.7 - - 542.5 - -Zinc 126.4 - - 322.4 - -Other 24.0 - - 65.8 - -Total (existing) 448.6 337.7 32.8% 1126.0 920.8 22.3%Copper - Zambia* 100.0 - - 100.0 - -Total 548.6 337.7 62.5% 1226.0 920.8 33.1%(including Zambia)* EBITDA:Aluminium 16.5 - - 50.3 - -Copper 29.2 - - 69.7 - -Zinc 51.5 - - 135.3 - -Other (3.2) - - (1.3) - -Total (existing) 94.0 93.8 0.2% 254.0 230.4 10.2%Copper - Zambia* 26.0 - - 26.0 - -Total 120.0 93.8 27.9% 280.0 230.4 21.5%(including Zambia)* (1) Segmental information under UK GAAP is not available for the correspondingquarter of last year.US$:INR average rates, 45.37 for 9 months ended 12/04, 46.29 for 9 months ended12/03 and an average of 45.92 over 2003-04. Operations : Production summary (mt, 000's) Q3 9 months 2004-05 2003-04 % change 2004-05 2003-04 % change Alumina 79 66 19.7% 209 200 4.5%Aluminium 34 32 6.3% 100 97 3.1%Copper - existing ops.Mined metal content 8 13 (38.5%) 28 37 (24.3%)Copper - Cathode 47 44 6.8% 125 137 (8.8%)Copper - Rods 34 32 6.3% 86 91 (5.5%) Copper -Zambia *Mined metal content 16 - - 16 - -Copper - Cathode 29 - - 29 - -Total Cathode 76 - - 154 - -- Inc.ZambiaZinc Metal content 89 80 11.3% 256 232 10.3%in concentrateRefined Zinc 55 56 (1.8%) 158 165 (4.2%) *All figures for KCM relate to the eight week period post acquisition, on 5/11/04. These numbers are subject to post acquisition audit and may be adjusted. For further information please contact: Peter Sydney-Smith, Finance Director Tel: +44 20 7659 4734John Smelt, Head of Investor Relations +44 787 964 2675Vedanta Resources plc James MurgatroydRobin Walker Tel: +44 20 7251 3801Finsbury Notes to Editors Vedanta is a London listed diversified metals and mining group. Our principaloperations are located throughout India, with further operations in Zambia andAustralia. The major metals produced are aluminium, copper, zinc and lead. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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