Hindustan Zinc Limited, the leading global integrated producer of zinc, lead and silver, reported its results for the first quarter ended June 30, 2023 through an exchange filing.
Financial Performance
Revenue from operations during the quarter was INR 7,282 Crore, down 22.4 per cent year-on-year on account of lower zinc & lead LME, lower lead volumes and differential strategic hedging impact partly offset by higher zinc and silver volumes, improved silver prices and favourable exchange rates.
Sequentially, revenue was down by 14.4 per cent on account of lower zinc LME, lower metal & silver volumes partly offset by improved silver prices.
Zinc cost of production before royalty (COP) for the quarter was US$1,194 (INR 98,103) per MT, lower by 5.6 per cent (0.7 per cent higher in INR terms) y-o-y and lower by 1.7 per cent (1.7 per cent lower in INR terms) sequentially. Cost improvement is majorly on account of softened coal and input commodity prices, better domestic coal (linkage) availability, further supported by better grades and operational efficiencies year on year.
EBITDA for the quarter was INR 3,359 Crore, down 36.4 per cent y-o-y and 20.2 per cent sequentially, mainly on account of lower zinc & lead LME partly offset by lower costs and better silver prices.
Net profit for the quarter was at INR 1,964 Crore, down 36.5 per cent y-o-y and 24.0 per cent sequentially, primarily on account of lower EBITDA partly offset by lower tax expense.
Operational Performance
Highest-ever first quarter mined metal production at 257 kt, an increase of 2.1 per cent y-o-y on account of higher ore production largely at Rampura Agucha & Kayad mines supported by improved mined metal grades and better mill recovery. In line with mine preparation activities being carried out every year in first quarter, MIC production was 14.6 per cent lower sequentially.
Refined metal production was 260 kt for the quarter, flat y-o-y and down 4% sequentially in line with plant availability. Integrated zinc production was 209 kt, up 1.4 per cent y-o-y and down 2.9 per cent sequentially. Integrated lead production for the quarter was down 5.7 per cent y-o-y and 6.3 per cent sequentially at 51 kt, in line with plant availability.
Saleable silver production for the quarter was 179 MT, up 1.2 per cent y-o-y and down 1.6 per cent sequentially in line with lead metal production and higher WIP depletion.
Liquidity and Investment
As on June 30, 2023, the Company’s consolidated gross investments and cash & cash equivalents were INR 9,709 Crore as compared to INR 10,061 Crore at the end of Mar’23 which was invested in high quality debt instruments. Total borrowings outstanding as on Jun’23 was INR 9,330 Crore.
Outlook for FY24
Both mined metal and refined metal production in FY24 is expected to be higher than last year. Mined metal is expected to be between 1,075-1,100 kt & refined metal production in the range of 1,050-1,075 kt.
FY24 saleable silver production is projected to be between 725-750 MT.
Zinc cost of production in FY24 is expected to be in between US$ 1,125-1,175 per MT. Project capex for the year is expected to be in the range of US$ 175-200 million.
Commenting on the performance, Arun Misra, CEO, said: “Hindustan Zinc has once again demonstrated its ability to deliver in a highly volatile external environment by accomplishing highest ever first quarter mined metal and silver production and maintaining a consistent run-rate of refined metal production. We strongly believe that in a cyclical commodity business, protecting margins is fundamental, hence our strong focus lies on optimising cost and enhancing volumes. The cornerstone of Hindustan Zinc’s strategic priorities is to maximise shareholders return, and delivering as per commitment is an accurate reflection of the same. Our strategic development projects are also progressing well and now on track, while we continue to progress on our sustainability journey towards net-zero by 2050. I am also happy to share that Hindustan Zinc has been certified as a ‘Great Place to Work’ for the fifth consecutive year. With such endorsements at the backdrop, we strive to grow safely, responsibly, and sustainably.”
Sandeep Modi, CFO, said: “Amidst the macro-economic headwinds moderating the base metal prices, Hindustan Zinc had a positive start of the year with a strong operational performance, attributable to consistent cost optimisation efforts and operational efficiencies, thereby protecting margins. With a first-time sequential drop in first quarter cost of production in the recent past, we continue to maintain our cost leadership in the global zinc cost curve. As we advance forward in this transformational year, we continue to focus on our ongoing development projects, automation & digitalisation investments and sustainable operations. I am happy to share that Hindustan Zinc has been recognised with ‘Masters of Risk Jury Award in Metals & Mining and ESG Specialization’ at CNBC ICICI Lombard India Risk Management Awards 2023.”
