Re: {LONGTERMINVESTORS} Hindalco - Thread
Rajesh Desai
Hindalco will receive $100 million in financing from Export Development Canada or EDC, the country’s export credit agency, for its Mahan Aluminium Project in Madhya Pradesh. The agreement, signed a few days ago, will support the supply of technology and capital equipment to the project by subsidiaries of Canada’s Rio Tinto Plc, operating under the umbrella of Aluminum Metals Group of Rio Tinto Plc.
The Mahan Aluminium Project consists of a359-ktpa aluminium smelter and a 900-Mw captive thermal power plant. The project was classified as Category-A by EDC. EDC develops and supports Canada’s exports by providing insurance and financial services to Canadian exporters and investors and their international buyers. This is the largest financing deal approved by EDC in India this year. Earlier this year, it also announced it would provide up to $50 million in financing to Reliance Industries to support the Indian company’s engagement with Canadian exporters in the energy sector to meet its procurement needs.
India’s infrastructure sector, and Canada’s aerospace and clean technology industries are EDC’s three key corporate priorities for the ongoing 2011-15 five-year term. India is the only country to be designated a corporate priority by EDC, reflecting its potential and importance to Canada as a growing trading partner. In 2011, around 280 Canadian companies used EDC products and services to undertake nearly $2.5 billion worth of business in India, according to the agency. EDC financed several major deals last year, including the $450-million order for 15 Bombardier aircraft by SpiceJet. It also announced financing of up to $100 million each for automobile companies Tata Motors and Mahindra & Mahindra; and up to $50 million each for Tata Communications and Idea Cellular to help the Indian companies procure various goods and services from Canadian exporters.
Company Update
HNDL: 3Q Profitability Under Threat; Maintain SELL
Profit to decline 5% QoQ in 3Q. We believe Hindalco Industries’ (HNDL) 3Q earnings will remain weak following 35% QoQ decline in 2Q profit. A mild recovery in aluminum prices will not help since cash spread of the aluminum business (30% of total profit) continues to suffer due to closure of the Hirakud power plant. Problems persist at Novelis (45% of profit) led by slow recovery in the US. Furthermore, the company is amidst doubling capacity although outlook for the projects is fraught with risks due to delay in allocation of coal block. We believe profit growth will trail increase in debt and forecast profit to decline 5% QoQ in 3Q and 16% for full-year FY13. We maintain SELL on HNDL and believe the current PER of 8x FY13F does not factor in these negatives
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CA. Rajesh Desai
Rajesh Desai
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CA. Rajesh Desai
Rajesh Desai
HNDL: Reduce 4Q earnings forecast and cut TP
We reduce our 4Q profit forecast by 15% and TP by 20%. Hindalco Industries (HNDL) continues to be in dire straits and no relief is visible in the near term. A 28% QoQ decline in 3Q profit would ensure that 4Q earnings would remain weak. In the last 20 days, aluminum prices fell 7% and will drive a 5% QoQ decline in 4Q aluminum EBITDA. Problems persist at Novelis (45% of profit), led by slow recovery in the US. We cut our 4QF EPS by 15% and forecast full-year FY13 EPS to decline 30% to Rs12.2. We reduce our TP by 20% to Rs80/sh (based on 6x PER) and maintain Sell rating on the stock. Report out today.
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CA. Rajesh Desai
Rajesh Desai
Hindalco Industries' subsidiary Novelis on Tuesday, 14 May 2013 reported net income attributable to its common shareholder of $202 million for fiscal 2013. Excluding tax-effected certain items, net income for fiscal 2013 was $241 million, compared to a net income of $218 million for fiscal 2012. Net income for the fourth quarter of fiscal 2013, excluding tax-effected certain items, was $80 million, representing a $55 million increase when compared to the same period in the prior year. Novelis is the global leader in aluminum rolled products and the world's largest recycler of aluminum.
Net sales for fiscal 2013 were $9.8 billion, an 11% decrease compared to the $11.1 billion reported in the same period a year ago. This decline was due to lower average aluminum prices and lower shipments when compared to last year. For the fourth quarter, sales were $2.5 billion compared to $2.6 billion reported for the fourth quarter of fiscal 2012.
Adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) for fiscal 2013 was $961 million, compared to $1,053 million reported for the same period in 2012. The year-over-year decrease was mostly due to disruptions related to the ERP implementation in two North American plants in the third quarter, pricing pressures in several operating regions, lower average aluminum prices, an impact from a fire at a North American plant in the fourth quarter and higher pension expense. Adjusted EBITDA for the fourth quarter of fiscal 2013 was $240 million, representing a 3% increase when compared to the $233 million reported for the same period a year ago, due primarily to stronger demand and good cost control. Adjusted EBITDA for fiscal 2013 was $961 million, compared to $1,053 million reported for the same period in 2012. The year-over-year decrease was mostly due to disruptions related to the ERP implementation in two North American plants in the third quarter, pricing pressures in several operating regions, lower average aluminum prices, an impact from a fire at a North American plant in the fourth quarter and higher pension expense. Adjusted EBITDA for the fourth quarter of fiscal 2013 was $240 million, representing a 3 percent increase when compared to the $233 million reported for the same period a year ago, due primarily to stronger demand and good cost control.
Shipments of aluminum rolled products totaled 2,786 kilotonnes for fiscal 2013, down slightly compared to shipments of 2,838 kilotonnes for the same period last year due mostly to the sale of the company's three foil plants in Europe and production disruptions in North America. Shipments of aluminum rolled products totaled 698 kilotonnes for the fourth quarter of fiscal 2013, essentially flat compared to shipments of 703 kilotonnes for the same period last year.
"As expected, we saw a sequential recovery from our seasonally low third quarter, with EBITDA increasing 30%," commented Phil Martens, Novelis President and Chief Executive Officer, "driven by strong demand, good cost control and higher operating efficiencies. And despite multiple unexpected headwinds in the second half of the fiscal year, as a result of prudent actions and fiscal discipline, the Company was able to achieve EBITDA of nearly $1 billion for the year. This was accomplished while commissioning two large-scale expansions, closing or divesting underperforming and non-core assets and making good progress on several ongoing global rolling, finishing and recycling expansions. I am proud of our accomplishments this year as we produced solid results in a transformational year marked by heavy investment."
Hindalco Industries unveils FY13 results on 28 May 2013. The company's net profit declined 3.8% to Rs 433.52 crore on 3% growth in net sales to Rs 6789.90 crore in Q3 December 2012 over Q3 December 2011.
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CA. Rajesh Desai
Rajesh Desai
On a consolidated basis, Novelis' net income slumped 84.62% to $14 million on 5.57% decline in net sales to $2408 millon in Q1 June 2013 over Q1 June 2012 as shipments of aluminum rolled products slid 1.94% to 708 kilotonnes during the period under review.
The decrease in net sales was primarily due to a 7% decline in average aluminum prices, lower shipments, and lower conversion premiums.
Adjusted EBITDA fell 21.24% to $204 million in Q1 June 2013 over Q1 June 2012. Results in Q1 June 2013 included a non-recurring $14 million amendment to the company's employee Long-Term Incentive Plan. In addition, Novelis faced continued pricing headwinds and softer than expected demand for beverage can sheet partially driven by unfavorable weather conditions.
"Despite the challenges we faced in the first quarter, we maintained financial discipline through good cost control and will continue this focus on cost containment going forward," commented Phil Martens, President and Chief Executive Officer for Novelis. "In addition, our global strategic expansions and favorable demand trends supported by the 2014 World Cup in Brazil and automotive material substitution towards aluminum sheet will also help drive our business forward in the second half of this fiscal year," he added.
Hindalco reports Q1 results later today, 13 August 2013. The company's net profit fell 24.7% to Rs 482.03 crore on 8.6% decline in net sales to Rs 6915.59 crore in Q4 March 2013 over Q4 March 2012.
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CA. Rajesh Desai