Hindustan Zinc Q2 results: Hindustan Zinc Q2 Results: Net corrects sequentially due to high input costs, lower metal prices

Hindustan Zinc on Friday reported a sharp increase in profitability for the fiscal second quarter compared to the same period last year, boosted by higher commodity prices, but financial data shrank from the previous quarter as prices corrected and input costs rose higher.

The company reported a 36% annual growth in its consolidated revenue to Rs 8,336 crore, but corrected sequentially by 11%. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 32% yoy to Rs 4,390 crore. However, high energy and fuel costs detracted from EBITDA by 17% sequentially.

Electricity accounted for about 45% of the company’s costs, compared to a historical average of about 30-32%. The reason for this was the high price of coal, around 90% of which the company imports from countries such as Indonesia and South Africa.

As a result, consolidated profit improved 33% yoy but declined 13% sequentially to Rs 2,681 crore.

The average zinc price on the London Metal Exchange (LME) for the quarter was $3,271 per tonne, up from $2,991 last year but significantly down from $3,915 in the previous quarter. Lead and silver prices experienced a similar sequential decline.

However, the company was controlling its costs to offset some of the impact of the fall in metal prices, said Hindustan Zinc chief executive Arun Misra.

“We’ve limited the impact through better mining control to get better ore grades and better metal recovery at the mill,” Misra told ET after the win.

The devaluation of the rupee also helped the company improve its results for the quarter. A weaker rupee contributed to a gain of Rs 150 crore compared to the previous quarter, said Sandeep Modi, the company’s deputy and interim chief financial officer.

Looking ahead, Misra expects LME zinc prices to remain between $3,000 and $3,200 per tonne, down from the $4,500 peak reached in March but well above the historical average.

The Company has maintained its guidance of refined metals production in the range of over 1 million tonnes, including FY23 silver production of 700-725 tonnes. Capital expenditure guidance has been maintained in the range of $125-150 million.

Hindustan Zinc stock closed 0.88% higher on BSE Friday, compared to a marginal gain in benchmark Sensex. Profits were declared during trading hours.

https://economictimes.indiatimes.com/markets/stocks/earnings/hindustan-zinc-q2-results-net-corrects-sequentially-due-to-high-input-costs-lower-metal-prices/articleshow/95016339.cms Hindustan Zinc Q2 results: Hindustan Zinc Q2 Results: Net corrects sequentially due to high input costs, lower metal prices

Russell Falcon

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