Q1 Results: Vedanta Profit Falls Further On Lower Commodity Prices, Copper Plant Shutdown
Vedanta’s profit fell 11.9 percent to Rs 1,351 crore.
Vedanta Ltd.’s profit fell further in the June quarter of 2019-20 as the prolonged shutdown of its key copper plant in Tamil Nadu and lower commodity prices continued to impact business.
Net profit fell 11.9 percent over last year to Rs 1,351 crore in the April-June period, according to its exchange filing. That, however, met the Rs 1,333.5-crore consensus estimate of analysts tracked by Bloomberg.
- Revenue declined 3.7 percent to Rs 21,374 crore.
- Operating profit fell 16 percent to Rs 5,198 crore
- Operating margin narrowed 360 basis points to 24.3 percent.
A copper smelter of Vedanta unit Sterlite Industries Ltd. in Tuticorin, Tamil Nadu, has been shut since May last year due to protests over environmental concerns. About 40 percent of India’s copper supply came from this plant. Vedanta’s Chairman Anil Agarwal said the company lost nearly $200 million in profit since the shutdown.
But that’s not the only issue for Vedanta. Its aluminium profitability, too, has been impacted due to a 11.6 percent year-on-year fall in prices on the London Metal Exchange. That offset the benefit of lower alumina prices. The company’s zinc business too has been weighed down by the 13 percent decline in prices and higher costs of production.
“Our businesses stayed resilient in a quarter with low commodity prices and uncertain market environment and we continued to ramp up across the key verticals—zinc and oil and gas,” Chief Executive Officer Srinivasan Venkatakrishnan said in a statement.
The miner now aims to become the world’s largest zinc producer and among the top three in silver production. Vedanta’s plans in the medium-term include a capex of Rs 55,000 crore to increase production by 50 percent across verticals, Chairman Navin Agarwal had said at the company’s annual general meeting earlier this month.
On Friday, Vedanta shares fell 4.26 percent to Rs 164.05 apiece on the BSE while the benchmark Sensex gained 0.14 percent to end the day at 37,882.79 points.