Indian mining group Vedanta (VDAN.NS) reported a 27% drop in its fourth-quarter profit, missing analysts’ estimates, as weaker prices for major metals like aluminum and zinc, coupled with rising finance costs, weighed on its performance.
Vedanta, led by billionaire Anil Agarwal, posted a consolidated net profit of 13.69 billion rupees (about $164 million) for the January-March period, compared to analysts’ average estimate of 21.10 billion rupees, as per LSEG data.
The company’s finance costs climbed nearly 34% during the quarter, further impacting its bottom line. Domestic zinc and aluminum prices remained soft as global metal prices were subdued due to demand concerns from top consumer China amid a sluggish economic recovery and property market woes.
The biggest revenue drop came from Vedanta’s zinc and lead vertical, its second-biggest segment, which fell 16%, leading to a 6% decline in the company’s total revenue. Revenue from its aluminum and copper businesses, the largest and third-largest contributors respectively, also fell 1.5% and 1.8%.
The drop in earnings comes at a time when Vedanta is in the midst of planning an overhaul of its operations to unlock higher value for shareholders, after facing a slew of plant shutdowns and earnings cuts in the past.
Investors are currently focused on the conglomerate’s major growth and expansion projects, while also helping its holding company, Vedanta Resources, reduce its significant debt.
Hindustan Zinc (HZNC.NS), a Vedanta unit, also reported a 21% fall in its quarterly net profit earlier last week, citing lower zinc prices as a key factor.
Despite the challenges, Vedanta remains focused on its strategic initiatives to improve its operational efficiency and profitability in the face of the current market headwinds.