Vedanta Apr-Jun profit muted due to surge in operating cost, sales up

28 Jul 2022

A sharp rise in power and fuel costs, and other expenses, took a severe toll on Vedanta Ltd’s profitability in the quarter ended June.

The net profit and operating profit were both up in single digits but the operating margin contracted sharply.

The metals and mining company recorded a small increase of 4.7% on the year in its consolidated net profit to 44.2 bln rupees while its consolidated total income rose 35% to 393.6 bln rupees.

Vedanta’s volume in different segments showed a mixed trend with iron ore and steel production registering declines and aluminium production recording a marginal increase. A double-digit rise in domestic zinc production is what aided the company’s topline in the June quarter.

The operating profit, as denoted by the earnings before interest, tax, depreciation, and amortisation, was up only 7% on the year to 107.4 bln rupees.

Power and fuel costs jumped 2.3 times to 89.5 bln rupees in Apr-Jun from that in the year ago period, while other expenses rose 38% to 87.2 bln rupees.

Both, power and fuel, and other expenses, made up for around 27% each of total expenses.

The main impact of the surge in input costs was felt on Vedanta’s EBITDA margin which contracted significantly to 32% in Apr-Jun from 41% a year ago.

Vedanta’s aluminium production rose marginally by 3% on the year to 565 kilo tn. Alumina production was also up marginally by 1% to 485 kilo tn.

The company’s production of saleable iron ore fell 14% on the year to 1.26 mln tn, while pig iron production stood at 189 kilo tn.

Vedanta’s steel production also fell 7% on the year to 269 kilo tn in the June quarter.

The company’s net debt increased by 58.2 bln rupees in Apr-Jun to 268 bln rupees as on Jun 30.