Hindustan Zinc Q4 profit falls 21% on plunging metal prices

Hindustan Zinc, a Vedanta Group company that deals in zinc, lead and silver businesses, has reported a 21% drop in its net profit at ₹2,038 crore in the January-March quarter (Q4 FY24), primarily affected by plunging metal prices.

The company's FY24 net profit was at ₹7,759 crore, down 26% y-o-y, primarily on account of lower EBITDA, partly offset by lower tax expense. The company's EBITDA income dipped 14% to ₹3,637 crore as compared to ₹4,208 crore in the same quarter last year. Earning per share for the quarter stood at 4.82 apiece, down 21%, compared to 6.11 per share in the year-ago quarter.

The Hindustan Zinc share closed 1.67% down at ₹398 on the BSE today. The world’s 2nd largest integrated Zinc producer saw its revenue from operations growing marginally at 3% at ₹7,549 crore quarter-on-quarter while the revenue fell 11% YoY on significantly lower zinc & lead prices and lower lead volume.

The company says its revenue for the full year FY24 stood at ₹28,932 crore, down 15% y-o-y on account of lower zinc prices and volumes, and strategic hedging impact in the base period. "Zinc cost of production before royalty (COP) for the quarter stood at US$ 1,051 (INR 87,284) per MT, lower by 4% q-o-q and 13% y-o-y in both US$ and INR terms," says Hindustan Zinc.

CEO Arun Misra says during the quarter, HZL became the 3rd largest silver producer globally. "Our commitment to sustainability efforts remains robust. I am happy to share that our renewable energy (RE) power delivery agreement of 450 MW is advancing well and the first flow of RE power is now preponed and expected to begin in April’24."

The company says its total reserves and resources as of March 31, 2024, stood at 456.3 million tonnes containing metal of 30.8 million tonnes. Total ore reserves stood at 175.1 million tonnes (net of production of 16.5 million tonnes in FY24) at the end of FY24 (173.5 million tonnes at the end of FY23), led by a focus on resource-to-reserve conversion during the year. Exclusive mineral resources totalled 281.2 million tonnes.

In its outlook, Hindustan Zinc says the company's mined metal and refined metal production in FY25 is expected to be higher than last year, given the ramp-up of all major projects commissioned in the last year and better capacity utilisation. "Mined metal is expected to be between 1,100-1,125 kt & refined metal production in the range of 1,075-1,100 kt." The company's project capex for the fiscal year is expected to be in the range of $270-325 million.