Higher external power sales boost already strong performance

With higher aluminium realisation, Nalco recorded higher than expected 44% Y-o-Y growth in revenue for Q4 FY10 to Rs 1625.97 crore (up 15% Q-o-Q). 59% higher average aluminium prices in Q4 FY10 to about USD 2163 per tonne led to 56% growth in aluminium segmental revenue to Rs 1253 crore. The revenue in electricity and alumina segment increased 48% and 43% Y-o-Y respectively to Rs 461.85 crore and Rs 694.61 crore. The OPM has sharply improved from 8.5% to 33.3% mainly due to decline in staff cost by 1500 bps to 12.2% of net adjusted revenue. However, staff cost in Q4 FY09 included Rs 123 crore provision towards pay revision for FY09. After adjusting for that the staff expenses were down 290 bps. The power & fuel cost has also come down by 140 bps to 25.8% of net adjusted revenue. The operating profit stood 466% higher Y-o-Y at Rs 541.06 crore (up 83% Q-o-Q).

At PBIT, there stood loss of Rs 330.74 crore in Q4 FY10 against Rs 133.67 crore loss in Q4 FY09 in aluminium segment due to higher operational cost. Higher external power sales boosted PBIT in electricity segment (increased 590% to 399.90 crore. PBIT in alumina was also up 191% to Rs 415.58 crore. The PAT after prior period adjustment stood at Rs 391.48 crore, up 372% Y-o-Y and 152% higher on Q-o-Q, quite higher than expected.

For FY10, net revenue was down 1% to Rs 5158 crore despite higher volume, mainly due to lower aluminium realisation. Average sales realization of aluminium for FY10 was USD 1946 per tonne as against USD 2234 per tonne in FY09. The OPM dipped 1230 bps to 22.2% due to lower aluminium realisation and higher power & fuel cost. The lower aluminium realisation adversely impacted the profitability of the company by Rs 772. The resulting operating profit stood 36% lower Y-o-Y to Rs 1146.24 crore. The net profit after prior period items stood 35% lower Y-o-Y at Rs 832.60 crore.

With higher aluminium realisation, Nalco recorded 44% Y-o-Y growth in revenue for Q4 FY10 to Rs 1625.97 crore. On Q-o-Q the revenue surged 15%. The revenue in aluminium segment increased 56% Y-o-Y to Rs 1253 crore on the back of 59% increase in average aluminium prices on Y-o-Y for Q4 FY10 to about USD 2163 per tonne. The revenue in electricity and alumina segment increased 48% and 43% Y-o-Y respectively to Rs 461.85 crore and Rs 694.61 crore.

The OPM has sharply improved from 8.5% to 33.3% mainly due to decline in staff cost by 1500 bps to 12.2% of net adjusted revenue. However it is due to higher staff cost in Q4 FY09 as there was provision of Rs 123 crore towards pay revision in Q4 FY09 for FY09. After adjusting for that the staff expenses were down 290 bps. The power & fuel cost has also come down by 140 bps to 25.8% of net adjusted revenue. The operating profit stood 466% higher Y-o-Y at Rs 541.06 crore (up 83% Q-o-Q).

At PBIT in aluminium segment, there stood loss of Rs 330.74 crore against Rs 133.67 crore loss in Q4 FY09 while PBIT in alumina and electricity segment increased 191% and 590% to Rs 415.58 crore and 399.90 crore respectively. PBIT margin in alumina and electricity segments improved from 29.4% to 59.8% and 18.5% to 86.6% respectively.

With lower other income (39% lower to Rs 65.76 crore), which was offset by lower effective tax rate at 24.9% against 34.2% in Q4 FY09 (while the absolute tax expenses increased 193% to 129.20 crore), and after considering prior period adjustment related to taxes for earlier years, the PAT stood at Rs 391.48 crore, up 372% Y-o-Y and 152% higher on Q-o-Q.

Segmental results

The company has segmented its business activities in three parts i.e. chemicals (alumina), aluminium and Electricity.

Chemicals-Alumina

The revenue for the quarter stood at Rs 694.61 crore, up 43% Y-o-Y while the segmental PBIT margin for the quarter improved from 29.4% to 59.8% with increasing by 191% to 415.58 crore.

Aluminium

The revenue in aluminium segment increased 56% Y-o-Y to Rs 1253 crore on the back of 59% increase in average aluminium prices on Y-o-Y for Q4 FY10 to about USD 2163 per tonne. However, the operational cost in aluminium was higher resulting in loss at PBIT level amounting to Rs 330.74 crore against Rs 133.67 crore loss in Q4 FY09.

Electricity

The revenue in electricity segment increased 48% Y-o-Y to Rs 461.85 crore on the back of increased external sales. The Segmental PBIT zoomed up by 590% to Rs 399.90 crore with PBIT margin improving from 18.5% to 86.6% respectively.

Performance for the Year ended March 2010

For FY10, net revenue was down 1% to Rs 5158 crore despite higher volume, mainly due to lower aluminium realisation. Average sales realization of aluminium for FY10 was USD 1946 per tonne as against USD 2234 per tonne in FY09 while the company produced record metal production of 4.31 lakh tonne in FY10 against 3.61 lakh tonne in FY09, thus 14% higher Y-o-Y. The OPM dipped 1230 bps to 22.2% due to lower realisation and higher power & fuel cost (380 bps higher to 31.4% of net adjusted revenue). The lower aluminium realisation adversely impacted the profitability of the company by Rs 772. The resulting operating profit stood 36% lower Y-o-Y to Rs 1146.24 crore. With 8% lower other income at Rs 368.85 crore and 17% higher depreciation charges, impact of which was partially mitigated by 43% lower tax expenses at Rs 375.45 crore (while effective tax rate dipped by 280 bps to 31.4%), the net profit after prior period items stood 35% lower Y-o-Y at Rs 832.60 crore.

Promoters Holding

As of 31st March 2010, promoters hold 87.15% (same as at the end of sequential quarter), foreign investors hold 4.15% (4.45% at end of sequential quarter), MFs, Banks and other institutions hold 5.41% (5.08% at end of sequential quarter), and others hold 3.29% (3.32% at end of sequential quarter). The promoters have not pledged any shares as on 31st March 2010.

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