Hindalco Industries warned rising input costs may impact performance in coming quarters after higher costs and lower production volumes in its aluminium business resulted in a 29 per cent fall in its quarterly profit from domestic operations.
The aluminium and copper producer, part of the diversified Aditya Birla Group, also warned it may face small delays in the timelines for its upcoming projects. Hindalco is in the midst of trebling aluminium capacity to 1.9 million tonnes by 2013 at a cost of about $5 billion.
"The general slowdown coupled with the stubbornly high cost of inputs may impact the business results in the near future," the company said in a statement.
It reported quarterly net profit of Rs 360 crore for its Indian operations, compared with net profit of Rs 502 crore a year earlier.
Analysts on average had expected profit of Rs 367 crore for the July-September quarter, according to a Reuters poll of brokerages.
Net sales fell about 2 per cent to Rs 6,220 crore.
Hindalco's U.S.-based subsidiary, Novelis, which is the world's largest producer of rolled aluminium products, will detail its September quarter earnings later on Tuesday.
Hindalco shares closed 1.8 per cent lower at Rs 112.45, after the results. The shares, valued by the market at $4.1 billion, are down 3 percent so far this year compared to a 21 percent rise in the Sensex.
Its aluminium business, which accounts for a third of domestic revenues but normally boasts higher margins, reported a 60 percent slump in profits from a year ago, due to operational disturbances at its two smelters, shortage of bauxite and higher fuel and material costs, the company said.
The lower margin copper segment, which accounts for two-thirds of the total revenue, saw profits rise 40 percent on better volumes and a weaker rupee during the quarter.
Non-ferrous metal prices have remained stagnant globally this year on demand uncertainties because of the euro zone debt crisis and softening Chinese demand.
Copper futures on the London Metal exchange were trading around $7,676 per tonne, nearly flat so far in 2012. Aluminium futures, at $1,913 a tonne, are down about 5 percent this year.
Copyright Thomson Reuters 2012
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