India's Hindalco Industries (HALC.NS) posted a sharp rise in first-quarter profit on Friday, boosted by higher aluminium prices and a production ramp-up, and expects costs to have peaked in the ongoing quarter.
The Aditya Birla Group-owned firm, one of India's biggest aluminium and copper producers, reported a 75.1% jump in consolidated net profit to 70.13 billion rupees ($736.12 million) for the three months ended June 30.
Its aluminium recycling unit, Novelis, restarted operations at its plant in Oswego, New York, in early June after fires in September and November last year. Novelis, which supplies rolled aluminium to beverage can makers and automakers, contributes over 60% to Hindalco's topline.
Hindalco's overall revenue from operations rose 32.1% to 848.25 billion rupees ($8.91 billion), supported by a 35.7% growth in Novelis, and a steady growth in its India business.
Aluminium prices rose about 45% year-on-year in the quarter, as the Middle East conflict raged, blocking almost 9% of global supply. The metal marked a fourth consecutive quarter of sequential price improvement.
The company expects average aluminium prices in the second quarter to be about $250 lower than in the first quarter, Managing Director Satish Pai said in a post-earning call.
Higher commodity prices typically lead to higher profit margins for mining companies.
Hindalco's India aluminium upstream business grew 44% and downstream by 46%, driven by strong demand in auto segment, while its India copper business grew 16%.
The company expects domestic demand for aluminium and copper to grow by 7-8% for the ongoing fiscal year, Pai said.
Its total expense climbed 25.4% to 741.96 billion rupees, due to a 37% rise in cost of materials consumed. Costs are expected to peak in the second quarter, the firm said.
($1 = 95.2700 Indian rupees)
