Hindustan Zinc Q2 results: Reports 7% drop in net profit, declares interim dividend of Rs 21.3 per share

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

Consolidated net profit for the three months to end-September stood at Rs 1,940 crore, the company said on Tuesday.

However, the company’s net profit on a quarter-on-quarter basis was up by nearly 43%.

“On the back of streamlined operations, we continue to deliver record volumes despite challenges posed by the pandemic. We are setting up Hindustan Zinc for its next phase of growth,” said the company’s chief executive officer, Arun Misra.

The interim dividend announced is 1,065% on face value of Rs 2 per share.

Vedanta Ltd. holds about 64.9% stake in Hindustan Zinc.

Several shareholders of Vedanta have been saying that dividend payouts worth Rs 4,500 crore received from HNZ are yet to be disbursed.

In reference to this, the company said, “The record date for the purpose of determining the eligibility for payment of interim dividend will be Wednesday, October 28, 2020. The interim dividend will be paid within the stipulated timelines as prescribed under law.”

The company’s mined metal production for the September quarter was up 9% yoy to 238 kilo tonnes (kt) and integrated metal production was at 237 kt, up 13% yoy on account of higher ore production. On a quarterly basis, mined metal production was higher by 18%.

However, the company said the increase was partly offset by decline in metal grades and lesser ore treatment.

“Mined metal production is up mainly due to higher ore production, better mine planning and effective targeting with increased use of technology,” the company said in a statement.

The company’s integrated zinc production was up 9% yoy at 180 kt, while lead production was up 29% yoy at 57 kt. Integrated silver production was up by 51% at 203 mt.

HNZ’s revenue from operations during the quarter stood at Rs 5,660 crore, an increase of 25% yoy, mainly led by higher metal volumes and higher silver prices, the company said.

Speaking to ET, Misra said, “while the company was dependent on exports during Q1 as domestic demand was weak, We see the trend reversing and we see a domestic demand uptick”

Earnings before interest, tax, depreciation and amortization for the quarter stood at Rs 2,952 crore, up 39% yoy on account of lower operating costs.

During the quarter under review, the cost of zinc production was Rs 68,228 per million tones, which was lower by 12% yoy.

“The cost of production benefited from a number of cost reduction initiatives yielding results, further supported by decline in coal, met coke and cement prices,” the company said.

For the whole year, the company said mine metal and finished metal production will be at 925-950 kt, while saleable silver production will be at 650 mt.

“We also guided the zinc cost of production to remain below $1,000 per million tonne (Rs 73,445) and project capex to remain between $100 million and $140 million (Rs 734-1,028 crore),” the company said.

HNZ’s net cash at the end of September was Rs 17,833 crore as against Rs 15, 480 crore a year ago, the company said, adding that it has raised Rs 5,020 crore through issuance of non-convertible debentures and a term loan.

“WE see that in Q2, steel industry which is our primary consumer, has picked up and prices are firming, I would say growth numbers in India will be better than last year for the upcoming quarters three and four and we are looking at the way the Chinese economy is picking up and India will follow that,” Misra added.

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