By Alex MacDonald
LONDON--India-focused Vedanta Resources PLC (VED.LN) Wednesday
reported a slight rise in operating profits for its first quarter,
driven by the performance of its oil, aluminum and copper divisions
as well as the depreciation of the Indian rupee against the U.S.
dollar, which lowered costs.
Earnings before interest, taxes, depreciation and amortization,
or Ebitda, rose 1% to $1.04 billion during the first three months
of the financial year ending March 31, 2015, compared with the same
period a year before. First quarter sales rose 7% to $3.06
billion.
Vedanta's operating profit was largely disclosed on Tuesday when
its majority-owned operating unit, Sesa Sterlite Ltd. (500295.BY),
released earnings. The only division that hadn't reported was
Vedanta's Zambian copper operations, where profitability dropped
primarily due to lower output from the temporary shutdown of its
Konkola mine.
The drop in Zambian profitability was more than offset by higher
profit from its Indian and Australian copper assets following the
suspension of its Tuticorin smelter in the first quarter a year
before.
Vedanta's copper division saw first quarter Ebitda rise 16% to
$61 million as a result. The rise occurred despite the suspension
of one of its Australian mines in January following a rock fall.
Vedanta said the mine will be closed until the 2016 financial year
when it may consider reopening if is technically and economically
feasible.
Cairn India Ltd. (532792.BY), Vedanta's largest earnings driver
in the first quarter, increased Ebitda by 1% to $549 million due to
a 3% rise in daily oil output and a 4% increase in the oil price
compared with the same quarter a year before. The earnings rise was
partially offset by a higher profit disbursement to the Indian
government during the period.
The company's zinc and lead operations, its second largest
earnings driver in the first quarter, reported a 14% Ebitda drop to
$269 million due to lower amounts of metal mined in India and
abroad, which more than offset higher zinc and lead prices.
The aluminum division, Vedanta's third largest earnings driver
in the first quarter, increased Ebitda by nearly three-fourths,
largely due to higher aluminum prices and the resumption of
operations at its Lanjigarh alumina refinery compared with the
first quarter of last year when it was suspended. Aluminum
production rose 4% to 203,000 metric tons in the first quarter.
The company's iron ore division, traditionally one of its
largest earnings drivers, swung to a small profit in the first
quarter compared with the same quarter a year before following the
lifting of an iron ore mining ban in the Indian state of Karnataka
that allowed the company to resume production. But output was
negligible at 10,000 tons owing to the slow pace of e-auction
sales. The company said it still expects to produce 2.29 million
tons of iron ore this financial year, in accordance with its
government-sanctioned cap. Vedanta also expects the Indian state of
Goa to give the go ahead to resume iron ore production in the
second half of the financial year after lifting a mining ban
there.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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