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VedantaVedanta Ltd (formerly known as Sesa Sterlite) has reported a lower-than-expected net profit (without exceptional items) of Rs 491.4 crore in the March quarter, down 73 per cent from the year-ago period, due to weak performance of Cairn India, in which it has a major stake.
The firm's revenues were at Rs 17,804 crore in the period under review, down 15 per cent from the corresponding period last year, because of lower crude oil and copper prices.
According to Bloomberg, net profit was seen at Rs 663 crore in the period under review, while the top line was expected at Rs 17,704 crore.
"The earnings reflect a very weak commodity prices environment. However, we remain confident of our diversified business model and low-cost asset base and will continue to generate attractive returns to our shareholders," Tom Albanese, chief executive of Vedanta, said in an earnings conference call on Wednesday.
The company's performance was dismal on the earnings before interest, taxes, depreciation, and amortisation (Ebitda) front, too, as it reported Rs 3,986 crore in the March quarter, down 40 per cent from the year-ago period. Ebitda margins at 28 per cent were much lower than last year's 45 per cent.
Even as profits from the oil and gas business remained low, stronger aluminium, zinc, lead (India business) and power revenues provided some respite. On a year-on-year basis, profits from the copper division nearly doubled to Rs 531 crore, while that of aluminium jumped to Rs 814 crore. Power segment moved into profits to Rs 129 crore from a loss of Rs 95 crore in the corresponding period last year. The company's India-based zinc business saw a 20 per cent increase in profit to Rs 1,624 crore in the period under review.
At the net level, the company took a one-time impairment hit of Rs 19,956 crore on the back of lower oil prices, which placed Vedanta in losses (after minority interest and consolidated share of profit in associates), which were reported at Rs 19,228 crore.
"Our Q4 results include a one-time non-cash impairment charge of acquisition goodwill, largely relating to the oil and gas business and the Sri Lanka block on account of a steep fall in crude oil prices. This has no impact on the production or future earnings capacity of these assets," said Albanese.
The company expects crude oil prices to remain $55-65 a barrel. Among metals, the firm sees a surplus of aluminium and copper in the global market, which could keep prices muted, while zinc is expected to remain buoyant.
The company has commenced iron ore production in Karnataka and mining activities in Goa are expected to resume in the latter half of 2015. "We have taken actions to maintain financial strength and flexibility during this period of weak commodity prices through capital re-phasing and cost management initiatives," said Albanese.
On the company's plan to reduce its work force, Albanese said: "We are looking at all businesses and reviewing the situation. At the same time, we're also employee sensitive."
Vedanta also refrained from commenting on the buzz that it would buy Electrosteel Steels. "We do not comment on speculative news," said Albanese.
