Information  X 
Enter a valid email address

Vedanta Resources (VED)

  Print      Mail a friend       Annual reports

Thursday 19 January, 2006

Vedanta Resources

3rd Quarter Results

Vedanta Resources PLC
19 January 2006


                                                                 19 January 2006

                             Vedanta Resources plc
            Unaudited Results for the Third Quarter and Nine Months
                             Ended 31 December 2005

Highlights

• Third quarter and nine month revenues of $974.7 million and $2,359.3
  million, up 78% and 92%, respectively
• Third quarter and nine month EBITDA of $264.6 million and $601.1 million, 
  up 121% and 115%, respectively
• Higher production volumes across all metals in Q3
  -    Aluminium: 60,000 tonnes, up 77%
  -    Copper - India: 75,000 tonnes, up 60%
  -    Zinc: 69,000 tonnes, up 26%

• Third quarter revenue and EBITDA 25% and 46% higher respectively than
  the preceding quarter.

'Higher production volumes together with rising metal prices have contributed to
the strong set of third quarter results.' said Anil Agarwal, Executive Chairman,
Vedanta Resources plc. 'Our growth projects are all on track and we continue to
improve on our volumes and efficiencies.'

Performance Summary

For the third quarter and the nine months period ended 31 December 2005, group
revenues were $974.7 million and $2,359.3 million respectively, an increase of
78% and 92%, compared with revenues of $548.6 million and $1,226.0 million
during the corresponding periods in the prior year.

EBITDA was $264.6 million and $601.1 million for the third quarter and the nine
months period ended 31 December 2005 respectively, an increase of 121% and 115%,
compared with EBITDA of $120.0 million and $280.0 million during the
corresponding periods in the prior year.

Revenues and EBITDA rose primarily due to higher prices and volume growth across
all our metals.

A total of 144 pots have been commissioned at the new aluminium smelter at
Korba. Three out of four captive power plant units are online and the fourth
unit is expected to be online in the fourth quarter. The ramp up of the 170,000
tpa zinc smelter at Chanderiya is progressing on schedule.

During the quarter, our Board approved a US$2.1 billion green-field 500,000 tpa
aluminium smelter project together with an associated 1,215 MW captive thermal
power plant in Jharsuguda, Orissa as well as a $125 million expansion of KCM's
Nkana smelter to increase smelting capacity in Zambia to 300,000 tpa.

Aluminium Business

During the quarter, the existing production facilities at BALCO and MALCO
continued to operate at their rated capacities. The total production of 60,000
tonnes during the quarter was 14,000 tonnes higher than the preceding quarter
and 26,000 tonnes higher than the corresponding period in the prior year. Third
quarter production included 24,000 tonnes produced from the new Korba smelter,
where a total of 144 out of 288 pots have been commissioned, by December 2005.

Revenues were $117.0 million and $272.8 million for the third quarter and the
nine months period ended 31 December 2005 respectively, an increase of 61% and
40%, compared with revenues of $72.5 million and $195.3 million during the
corresponding periods in the prior year. The increase in revenue is attributable
to higher metal prices and increased volumes.

EBITDA was $32.1 million and $69.7 million for the third quarter and the nine
months period ended 31 December 2005 respectively, an increase of 95% and 39%,
compared with EBITDA of $16.5 million and $50.3 million during the corresponding
periods in the prior year. The increase in EBITDA is due to the increase in
revenues, partly offset by higher energy and certain other input costs.

The 1-1.4 mtpa alumina refinery project in Lanjigarh, Orissa is proceeding well
with mechanical completion expected by mid 2006. Out of the budgeted $800
million, an amount of $326 million has been spent by December 2005. Further to
the report submitted by the committee appointed by the Supreme Court of India,
the Government of Orissa and other concerned parties are in the process of
submitting their responses, which will lead to further directions in this
matter.

Copper Business

The strong ramp up of the Tuticorin smelter was evidenced by higher copper
production of 75,000 tonnes during the current quarter which was 7,000 tonnes
higher than the preceding quarter and 28,000 tonnes higher than the
corresponding period in the prior year.

Despite closure of the Thalanga Copper Mines, production levels have largely
remained unaffected due to improved operational efficiencies at the Copper Mines
of Tasmania's Mt. Lyell operations which continues to be the source of
approximately 11% of total concentrate requirement in India.

Revenues for Copper - India/Australia operations were $448.0 million and
$1,044.4 million for the third quarter and the nine months period ended
31 December 2005 respectively, an increase of 98% and 93%, compared with
revenues of $225.7 million and $542.5 million during the corresponding periods
in the prior year. The increase in revenue is attributable to higher metal
prices and increased volumes.

EBITDA for Copper - India/Australia operations was $56.9 million and
$138.4 million for the third quarter and the nine months period ended
31 December 2005 respectively, an increase of 95% and 99%, compared with EBITDA
of $29.2 million and $69.7 million during the corresponding periods in the prior
year. EBITDA has increased during the current quarter due to improved TC/RCs
together with better metal recoveries and by-product management, partly offset
by an increase in energy costs and a reduction in tariffs.

Revenues for Copper - Zambia(1) operations were $188.1 million and
$493.1 million for the third quarter and the nine months period ended
31 December 2005 respectively. EBITDA for Copper - Zambia operations was
$56.8 million and $147.1 million for the third quarter and the nine months
period ended 31 December 2005 respectively. Q3 revenues and EBITDA were 25% and
40% higher than the preceding quarter.

During the quarter, we experienced increased labour and energy costs in KCM
compared with the preceding quarter. Labour costs were higher due to a recently
concluded wage settlement reached with employees during the period. Energy costs
increased due to fuel imports during the quarter. The commissioning of the
sulphur-based acid plant in the fourth quarter, the ongoing monitoring of
controllable costs and the gradual increase in production volumes are expected
to have a favourable impact on unit costs going forward.

(1) Prior period comparatives for Copper - Zambia relate to the eight week 
    period post acquisition of KCM on 5 November 2004. Changes over prior period
    are not disclosed as the comparison will not be meaningful.

Zinc Business

Total zinc produced was 69,000 tonnes during the current quarter which was
3,000 tonnes higher than the preceding quarter and 14,000 tonnes higher than the
corresponding period in the prior year. Production in the current quarter
includes production of 15,000 tonnes from the newly commissioned smelter. Sales
during the quarter were augmented by exports of 65,000 tonnes of zinc
concentrate.

Revenues were $202.5 million and $474.4 million for the third quarter and the
nine months period ended 31 December 2005 respectively, an increase of 60% and
47%, compared with revenues of $126.4 million and $322.4 million during the
corresponding periods in the prior year. The increase in revenue is attributable
to higher metal prices and increased volumes.

EBITDA was $117.7 million and $241.7 million for the third quarter and the nine
months period ended 31 December 2005 respectively, an increase of 129% and 77%,
compared with EBITDA of $51.5 million and $135.3 million during the
corresponding periods in the prior year. The increase in EBITDA is due to the
increase in revenues combined with a marginal decrease in unit costs of
production. Unit costs of production were lower during the quarter on account of
savings in energy costs arising from our captive power facilities, in part
offset by an increase in royalties due to higher metal prices.

Work on our new 50,000 tpa lead plant is progressing satisfactorily and is
expected to be completed in the fourth quarter of the current financial year.

Growth Projects

During the quarter, our Board also approved a $2.1 billion green-field
500,000 tpa aluminium smelter project together with an associated 1,215 MW
captive thermal power plant in Jharsuguda, Orissa in India. Preparatory work in
terms of vendor selection and ordering equipment has commenced.

Preliminary work on the $400 million Konkola Deep Mines expansion project to
increase copper ore output at KCM commenced during the third quarter. Short
listing of vendors for civil and mechanical contracts for the $125 million Nkana
smelter expansion project has also started.

Preliminary work on the new 170,000 zinc smelter project at Chanderiya has
commenced with construction orders currently being placed with suppliers.


Financial Summary (Unaudited)
                                                                           (in $ million, except as stated)
                                                Q 3                   Q 2              9 months           %
                                2005-06     2004-05**   % change  2005-06   2005-06     2004-05**    change
Revenue
 Aluminium                        117.0        72.5       61.4%      82.5     272.8       195.3       39.7%
 Copper
  Copper -India/Australia         448.0       225.7       98.5%     362.1   1,044.4       542.5       92.5%
  Copper - Zambia*                188.1       100.0          NA     150.7     493.1       100.0          NA
 Zinc                             202.5       126.4       60.2%     151.0     474.4       322.4       47.1%
 Other                             19.1        24.0      (20.4%)     34.9      74.6        65.8       13.4%
Total                             974.7       548.6       77.7%     781.2   2,359.3     1,226.0       92.4%



EBITDA
 Aluminium                         32.1        16.5       94.5%      19.9      69.7        50.3       38.6%
 Copper
  Copper - India/Australia         56.9        29.2       94.9%      48.3     138.4        69.7       98.6%
  Copper -Zambia*                  56.8        26.0          NA      40.5     147.1        26.0          NA
 Zinc                             117.7        51.5      128.5%      70.9     241.7       135.3       78.6%
Other                               1.1        (3.2)         NA       1.8       4.2        (1.3)         NA
Total                             264.6       120.0      120.5%     181.4     601.1       280.0      114.7%



Production Summary (Unaudited)
                                                                         (in '000 tonnes, except as stated)
                                                Q 3                    Q 2             9 months
                                2005-06     2004-05     % change   2005-06   2005-06    2004-05   % change
Alumina                              78          79         (1.3%)      71       220        209        5.3%
Aluminium                            60          34         76.5%       46       142        100       42.0%
Copper - India/Australia
 Mined metal content                  8           8            -         8        26         28       (7.1%)
 Copper - Cathode                    75          47         59.6%       68       198        125       58.4%
 Copper - Rods                       41          34         20.6%       41       121         86       40.7%
Copper - Zambia *
 Mined metal content                 28          16            NA       29        83         16          NA
 Copper - Cathode                    46          29            NA       38       127         29          NA
 Zinc - Mined Metal Content         127          89         42.7%      106       347        256       35.5%
Refined Zinc                         69          55         25.5%       66       192        158       21.5%


*  Prior period comparatives for Copper - Zambia relate to the eight week period
   post acquisition of KCM on 5 November 2004. Changes over prior period are not
   disclosed as the comparison will not be meaningful.
** amounts for 2004-05 are presented on a UK GAAP basis


For further information, please contact:
  Sumanth Cidambi                               sumanth.cidambi@vedanta.co.in
  Associate Director - Investor Relations       Tel: +91 22 5646 1531
  Vedanta Resources plc

  Faeth Birch                                   Tel: +44 20 7251 3801
  Robin Walker
  Finsbury

About Vedanta Resources plc

Vedanta Resources plc is a London listed diversified metals and mining group.
Its principal operations are located throughout India, with further operations
in Zambia and Australia. The major metals produced are aluminium, copper, zinc
and lead. For further information, please visit www.vedantaresources.com.

Disclaimer

This press release contains 'forward-looking statements' - that is, statements
related to future, not past, events. In this context, forward-looking statements
often address our expected future business and financial performance, and often
contain words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,'
'seeks,' or 'will.' Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. For us, uncertainties arise from the
behaviour of financial and metals markets including the London Metal Exchange,
fluctuations in interest and or exchange rates and metal prices; from future
integration of acquired businesses; and from numerous other matters of national,
regional and global scale, including those of a political, economic, business,
competitive or regulatory nature. These uncertainties may cause our actual
future results to be materially different that those expressed in our
forward-looking statements. We do not undertake to update our forward-looking
statements.






                      This information is provided by RNS
            The company news service from the London Stock Exchange