India’s Hindalco Industries posted a surprise profit drop for the second straight quarter on Friday, missing analysts’ estimates, as expenses linked to a fire-related disruption at U.S. unit Novelis offset the benefit of higher base metal prices.
The Aditya Birla Group-owned firm reported a 50.8% fall in consolidated net profit to 25.97 billion rupees ($271.40 million) for the three months ended March 31, missing analysts’ estimates of 43.12 billion rupees, per data compiled by LSEG.
Novelis, Hindalco’s aluminum products arm, which supplies rolled aluminum to beverage can makers and automakers, was hit at its plant in Oswego, New York, in September and November last year, causing production interruptions in the quarter.
The company took a 41.71 billion rupee charge in the fourth quarter related to the incidents and said it expects the plant to restart within the next few weeks.
Despite the disruptions, Novelis reported a 10.3% rise in revenue to 438.1 billion rupees, driven by higher average aluminum prices. The U.S.-based unit contributes to about 60% of Hindalco’s top line.
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“Novelis demonstrated strong underlying business momentum,” managing director Satish Pai said, adding that the company’s India business delivered a record performance across the aluminium upstream, aluminium downstream and copper segments.
Hindalco, one of India’s biggest aluminium and copper producers, benefited from firmer base metal prices and higher demand in the seasonally strong quarter when construction activity peaks and automotive companies push production and sales targets before the financial year-end.
Benchmark three-month aluminium and copper rose 21.8% and 36.7% year-on-year, respectively, in the reporting quarter.
Higher commodity prices typically lead to higher profit margins for mining companies.
Hindalco’s overall revenue from operations rose 20.4% to 781.33 billion rupees, supported by a strong performance in its India business.
Analysts, on average, had expected a revenue of 723.96 billion rupees.
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