Vedanta Resources ramps up production

Global natural resources company, Vedanta, has increased its production on aluminium, power and iron ore businesses during the first half.

“Vedanta Resources continues to deliver on all fronts, achieving robust operational and financial performance in the first half of the financial year,” said chairman Anil Agarwal.

The group’s revenue fell by 15% to $4.9bn for the six months ended 30 September 2016 and earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 4% to $1.2bn in the first half of 2017. The group attributed this to lower commodity prices and lower volumes at Zinc India in line with mine plans.

The EBITDA margin peaked to its highest levels in the last two years to 33%, compared to 30% last year, driven by lower costs.

Operating profit rose to $720m from $578m in the previous period.

Basic loss per share edged up to 23.3 cents compared to the loss of 117.7 cents in 2016, reflecting benefits of cost optimisation. The interim dividend was set at 20 cents per share.

Free cash flow after growth capital expenditure of $166m. Net debt increased to $8.2bn due to special dividend payment by Hindustan Zinc in April 2016.

The board is continuing to focus on cost optimisation, generating strong free cash flow and de-levering the company’s balance sheet.

The company’s merger with Cairn India has been approved by shareholders and is expected to completed in the first quarter of 2017’s cumulative year.

“This is a significant step towards simplifying the group, and creating long-term shareholder value, in line with our strategic priorities,” said Agarwal.

He believes the company’s exposure to India means it is well-positioned to benefit from the fast growing global economy.

The share price rose by 11.86% to 873.65p at 0907 GMT on Thursday.