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Hindustan Zinc FY20 profit slips 14% to Rs 6,805 crore; defers guidance for FY21 due to coronavirus

Hindustan Zinc has deferred guidance for FY21 to end of June quarter of this fiscal due to uncertainty around ongoing lockdowns and business disruption risk amid coronavirus pandemic

Hindustan Zinc FY20 profit slips 14% to Rs 6,805 crore; defers guidance for FY21 due to coronavirus

On May 12, 2020, Hindustan Zinc's board has declared an interim dividend of Rs 16.50 per equity share with face value of Rs 2 each

Hindustan Zinc, a subsidiary of Vedanta Resources, on Thursday reported a 14 per cent decline in its net profit at Rs 6,805 crore for the full financial year ended March 31, 2020, impacted by decline in operating margin and higher depreciation and amortisation expense. The world's second largest zinc producer had posted net profit of Rs 7,956 crore in FY19.

The revenue of the company dropped by 10.5 per cent to Rs 20,495 crore as compared to Rs 22,900 crore in FY19, due to decline in London Metal Exchange (LME) prices and lower volume, partly offset by higher silver prices and rupeedepreciation.

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) fell by 18 per cent to Rs 8,849 crore from Rs10,747 crore in the previous fiscal.

For the fourth quarter ended March 31, 2020 (Q4 FY20), Hindustan Zinc reported a 33.4 per cent fall in its net profit to Rs 1,339 crore compared to Rs 2,012 crore in the same quarter last year. Its total income declined to Rs 4,861 crore in the January-March quarter, compared with Rs 6,030 crore in the year-ago period.

The company has deferred guidance for FY21 to the end of June quarter of this fiscal due to uncertainty around ongoing lockdowns and business disruption risk. Our current focus remains around sustaining normal level of productions, active management of costs and capital conservation, it added.

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Commenting on the Q4 and FY performance, Sunil Duggal, CEO, said: "Industrial activity across the globe is undergoing a level of disruption unforeseen since the Second World War. In these challenging times, our focus is business continuity and safety of our people and operations and supporting our communities affected by the pandemic. We have ramped up our operations back to normal levels and are confident of delivering good performance in FY21."

Mined metal production for the quarter was up 2 per cent y-o-y to 249 thousands of tonnes (KT), despite operations shutdown from March 22 onwards in compliance with lockdown to combat COVID-19, it said. The increase in production was on account of higher ore production and better overall grade.

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Integrated metal production was 221KT for the quarter, down 3 per cent y-o-y due to lockdown in March. Integrated zinc production was 172KT, down 2 per cent y-o-y, while integrated lead production dropped 7 per cent y-o-y to 49KT.

Integrated silver production was 168MT, down 12% from a year ago due to lower lead production partly offset by better SK silver grades and improving silver recovery rate.

On May 12, 2020, Hindustan Zinc's board has declared an interim dividend of Rs 16.50 per equity share with face value of Rs 2 each, amounting to Rs 6,972 crore.

On COVID-19, the company said it has taken a pro-active approach to keep our assets and people safe while increasing engagement with its communities during these difficult times. The company's operations were halted from March 22 and most employees were encouraged to work from home barring some employees who attended the call for duty to keep production assets safe including critical care and maintenance, it said.

Hindustan Zinc gradually restarted operations from April 8 and all its mines and smelters were operational in a couple of weeks. In the month of April 2020, the company ramped up its mines and smelters to 40 per cent and 80 per cent of capacity, respectively.

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