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earnings | IST

Hindalco says global aluminium deficit likely to widen; to spend $2 bn on Novelis in next 5 years

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Hindalco reported earnings for the June-ended quarter. The company has clocked in a phenomenal performance in the aluminium segment with margins at multi-year highs. Satish Pai, MD of Hindalco, discussed the performance with CNBC-TV18.

Hindalco reported earnings for the June-ended quarter. The company has clocked in a phenomenal performance in the aluminium segment with margins at multi-year highs. Aditya Birla Group firm Hindalco Industries posted a standalone net profit of Rs 910 crore in the quarter ended June 2021 as against a loss of Rs 40 crore in the corresponding quarter of last year. The company's standalone revenue in Q1FY22 jumped 79.2 percent to Rs 13,298 crore from Rs 7,420 crore, YoY. On the operational front, standalone EBITDA increased to Rs 2,096 crore as against Rs 573 crore in the year-ago period, while EBITDA margin improved to 15.7 percent from 7.7 percent, YoY. Satish Pai, MD of Hindalco, discussed the performance with CNBC-TV18.
Pai said the aluminium global deficit currently stands at at 6,00,000 tonne but it can widen to 2 mt.
This year the company plans to reduce the Novelis debt by another USD 700 million that was committed during the capital allocation presentation done in February. Pai said, “I think after that USD 700 million is pared down, the next debt reduction that is going to happen is in the India business in FY23. So overall our plan is that over the next five years, further USD 2 billion of the gross debt will be pared down.”
Novelis EBITDA per tonne was at USD 522, the Hindalco aluminium India business EBITDA per tonne was about USD 1000. “From a sustainability margin point of view, we have already said that Novelis should be able to continue to keep its EBITDA per tonne comfortably above USD 500 for the remaining three quarters of this year. From an India aluminium point of view, the LME is very strong and if it continues with the strength it is showing, we should be able to maintain those EBITDA margins,” he said.
He believes the supply and demand situation is very tight.
He further added, “From Q2FY22, you are going to see very steady performance from the copper business.” He expects that copper EBITDA should move back to over Rs 300 crore from Q2FY22 onwards.
On Aleris acquisition, he said “In whichever way you look at the Aleris acquisition, we closed the acquisition during the height of the COVID, we have integrated the company and the benefits of the acquisition are being seen now in the results that we are presenting.”
On further acquisitions, he said, “Hindalco is on the prawl but in a very measured manner now. So I think that any growth that we are going to do is going to be organic, because the macroenvironment is very good, so we are generating cash.”
For the full interview, watch the accompanying video.