Hindalco flags 'inflationary cost pressures' as Q3 profit falls 63%

"Despite the hits of this quarter due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model," Satish Pai, Managing Director, Hindalco Industries stated.

Hindalco Industries on February 9 flagged worldwide "inflationary cost pressures" as the Aditya Birla Group company reported a 63 percent drop in consolidated net profit at Rs 1,362 crore for the quarter ended December 31, 2022.

Industries worldwide were being "buffeted by macro-economic and inflationary cost pressures, yet we delivered a strong operational performance with higher volumes across India business segments",  Satish Pai, Managing Director, Hindalco Industries, said.

Listing the segment-wise performance, Pai said though the India aluminium upstream business EBITDA (earnings before interest, taxes, depreciation, and amortization) came under pressure from the surge in input costs and lower realisations, it was partially offset by higher volumes and better pricing.

The copper business registered a 40 percent growth in EBITDA, driven by "higher volumes and better realisations, supported by a robust domestic demand."

Novelis, Hindalco's US unit and the world's largest producer of rolled aluminium products, had earlier reported a 33 percent fall in core profit for the December quarter due to higher costs and inventory destocking in the beverage packing market. The profit contribution from Novelis accounts for almost 42 percent of Hindalco's total profit.

Also read: Novelis reports a weak quarter: What does this mean for Hindalco?

On its performance, the company noted that Novelis witnessed "unprecedented inflationary pressures, unfavourable foreign exchange rates and lower shipments," adding however, that this was partially offset by higher pricing and a favourable product mix.

"Despite the hits of this quarter due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model," Pai stated.

In addition to the net profits, Hindalco's revenue from operations came in at Rs 53,151 crore, up merely 6 percent from Rs 50,272 crore in the year-ago period.

Profit and revenue were hit due to a below-par performance by its subsidiary Novelis. However, higher volumes and steady operational performance across India operations helped overall performance.

Shares of Hindalco Industries on February 9 closed 1.85 percent higher at Rs 444.35 apiece on BSE.