Hindustan Zinc Q3 Results: Hindustan Zinc Q3 profit plunges 27% to Rs 1,620 crore

Hindustan Zinc posted a 27% decline in net profit in Q3FY20 to Rs 1,620 crore against Rs 2,211 crore in the same period last year. The country’s leading zinc producer also saw its revenue from operations dip by 16% in the third quarter to Rs 4,672 crore compared to the same period last year, due to a 9% decline in zinc prices on the benchmark London Metal Exchange (LME) and lower volumes compared to a year ago.

The company’s profit before tax (PBT) went down to Rs 2,095 crore in Q3FY20 against Rs 2,848 crore from a year ago, an official statement from HZL said on Monday. EBITDA (earnings before interest tax depreciation and amortization) for the quarter was at Rs 2,288 crore, 20% lower compared to a year ago period primarily due to lower revenues.

“From a year ago net profit in Q3 was affected by higher depreciation and lower amortization expense on account on higher ore production and higher capitalization and also due to lower investment income due to mark to market gains last year,” the statement added.

HZL said zinc sales went down to Rs 3,165 crore in Q3FY20, which was 18% lower than zinc sales of Rs 3,841 crore reported in Q3FY19. The company’s lead sales went down 21% to Rs 652 crore during the quarter against Rs 856 crore in the same period a year ago.

The company’s stock closed at Rs 216.50 down 0.23% over its previous close on the BSE.

HZL’s topline and EBITDA numbers were in line with analysts’ expectations though net profit figures were lower than estimates. “HZL’s Q3FY20 topline stood at Rs 4,672 crore in line with our estimate of Rs 4,688 crore, while EBITDA came in at Rs 2289 crore broadly in line with our estimate of Rs 2317 crore, ICICI Securities said in its initial report after the results. “During the quarter, HZL reported a PAT of Rs 1,620 crore against our estimate of Rs 1,650 crore,” it added.

HZL said mined metal production was lower by 5% during the third quarter of FY20 at 235,000 tonne. The company attributed it to lower grades of ore at its Kayad and Sindesar Khurd mines. From a year ago, integrated metal and silver production was down 9% and 16% respectively in Q3FY20 with lower mined metal production, lower lead production and lower silver grades, the company said. Zinc cost of production went up to $1077 (Rs 76,571 per tonne) year on year during Q3FY20, which was 7% higher in rupee terms. HZL ascribed it to lower grades, higher mine development expenses, higher cement prices. Commenting on HZL’s Q3 performance, Sunil Duggal, CEO, said: “We have delivered good performance in a challenging market environment and are committed to maintain the growth trajectory.” Swayam Saurabh, HZL CFO, said: “Our target is to maintain cost leadership by bringing in operational efficiencies and higher productivity though technology adoption and digital transformation, aided by completion of our key projects.”