NALCO Apr-Jun net profit, sales up strongly but margin contracts

8 Aug 2022

The operating margin of National Aluminium Co Ltd declined marginally in the June quarter even as the consolidated net sales, net profit and operating profit increased sharply. A substantial increase in input costs checked any expansion in the operating margin.

The company's aluminium segment performance drove the strong topline and bottomline performance of the company during the quarter, while alumina segment performance was weak.

The consolidated net profit of the aluminium and alumina producer rose 60% on year to 5.6 bln rupees on the back of a 53% jump in consolidated net sales to 37.8 bln rupees.

NALCO's earnings before interest, tax, depreciation and amortisation also increased sharply by 50% to 8.7 bln rupees.

But a surge in energy costs and raw material expenses stopped any operating margin expansion. The EBITDA margin was 23% in Apr-Jun, 50 bps lower than that in the year ago period.

NALCO's power and fuel costs which made up for 44% of total expenses in Apr-Jun jumped 79% on year to 13.4 bln rupees.

Its raw material expenses rose significantly by 87% to 7.3 bln rupees. It contributed 24% to total expenses.

But a strong control over other expenses which went up by just 3% to 4.9 bln rupees meant that the EBITDA rose strongly.

The company's sales performance in Apr-Jun was driven by aluminium segment sales which jumped 72% on year to 29.8 bln rupees.

The alumina segment sales growth was moderate in comparison. Its sales went up by 12% to 12 bln rupees.

The operating profit performance during the June quarter was also driven by the aluminium segment. The aluminium segment profit doubled to 8 bln rupees, while the alumina segment recorded a loss of 71 mln rupees as compared to a profit of 1.2 bln rupees a year ago.

Sequentially, NALCO's consolidated net profit was 46% down and net sales were 13% lower. It reflected demand pressures in the June quarter.

The company's EBITDA margin of 23% in Apr-Jun was also sharply lower than 37.3% in the March quarter.

The government owns a 51.3% stake in NALCO.

The company today declared a final dividend of 1.50 rupees per share for 2021-22 (Apr-Mar).