Hindustan Zinc Q3 results: Net profit rises 36% to Rs 2,200 crore

Hindustan Zinc Q3 results: Net profit rises 36% to Rs 2,200 crore

Mumbai: Hindustan Zinc has reported a 36% year-on-year rise in consolidated net profit at Rs 2,200 crore during the December quarter of FY 21 as against Rs 1,620 crore during the same period last year mainly on account of a strong recovery in metal prices and the cost-cutting measures.

The company has said that it has recorded the highest ever quarterly ore production of 244 kilo tonne (kt) in Q3 of FY 21.

“Zinc among the other metals was the one to show significant recovery since Q2 and reached around $2350. In Q3 we have hit around 2360 and today it is around $2700. We think the steel prices and other infra push will keep the prices high,” said Arun Misra in an interaction with ET.

Hindustan Zinc’s earnings before interest, taxes, depreciation and amortization for the December quarter rose 45% and was recorded at Rs 3,314 crore.

Revenue from operations during the quarter was at Rs 5,915 crore, an increase of 28% yoy led by higher metal volumes, higher zinc & silver prices and rupee depreciation partly offset by lower lead prices. Zinc sales volume increased 6% yoy and lead by 30% yoy in line with higher production and robust demand, the company said.

Zinc LME prices were sequentially up 13%, while lead prices were up 1% during Q3.

The company during the second quarter reported a 7% year-on-year drop in consolidated net profit, mainly on account of higher depreciation and finance costs. The company during Q2 declared an interim dividend of Rs 21.30 per share amounting to Rs 9,000 crore for FY21.

The cost of production for the quarter and 9 months benefited from ongoing structural cost reduction initiatives like transition to underground mining operations. However it was partly offset by sequential increase in mine development in Q3, the company said in a statement on Wednesday.

“We have undertaken various measures like buying commodities at a lower price, renegotiating service contracts. One of biggest cost component is power, and we have worked on bringing the cost down,” said Misra

“Last year our fixed cost was around $140 per tonne , we leveraged Covid and did significant investment in digitisation and talent refilling…Q1 we reported a cost of around $950 and in Q2 it was around $990, our reported cost $920 after the under ground transition. Cost has reset itself structurally,” said Swayam Saurabh, Chief Financial Officer , Hindustan Zinc.

During the quarter under review, Hindustan Zinc’s integrated metal production was at 235kt , up 7% from a year ago. Integrated zinc production was 182kt, up 2% yoy, while integrated lead production was up 28% y-o-y to 52kt. Integrated silver production was 183 MT, up 23% y-o-y.

For the nine month period the company’s refined metal production was up 4% at 674kt in line with mined metal availability, while 9M silver production was 14% higher yoy at 503 MT in line with higher lead production and higher metal grades.

The company had previously guided to achieve mined metal and finished metal production of 925-950 KT each and saleable silver production of 650 MT in FY21. The company also estimated zinc cost of production to remain below $1,000 per MT and project capex between $100 million and $140 million for the year.

The Company’s net cash and cash equivalents at end of December 31, 2020 was Rs.10,987 Crore as compared to Rs. 17,832 Crore at the end of the second quarter

“Environment Clearance (EC) received from the Ministry of Environment & Forest (MoEF) for Zawar mine expansion from current 4 million tonne per annum to 4.8 million tonne per annum,” the company said.

“I’m sure we are going to see some reforms in the auto sector in the upcoming budget, we will also see more and more freeing up of mines and we can exploit our capability in exploration and mining,” Misra said.

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