Hindustan Zinc unveiled its financial results for Q2FY24 on Friday, marking the fourth consecutive quarter of a significant decline in profit, as it grapples with reduced sales and lower zinc prices.
During the quarter ending on September 30, the company's consolidated net profit fell by 35.5 per cent, amounting to Rs 1,729 crore. This is in stark contrast to the Rs 2,680 crore reported during the corresponding period in the previous year.
Despite witnessing an 11 per cent upturn in zinc prices, achieving its most impressive quarterly performance since March 2022, zinc prices still linger well below their highs of 2022. This drop can be attributed to factors such as concerns regarding rising interest rates and the fluctuations in demand from China, a major consumer of base metals.
Following the release of these results, the company's shares, which are under the ownership of Vedanta, concluded 1.72 per cent lower at Rs 309 each.
In the second quarter, Hindustan Zinc's quarterly revenue also witnessed a decline of 18.6 per cent, amounting to Rs 6,619 crore. This decline is mainly attributed to lower sales and the reduced prices of zinc and lead on the London Metal Exchange, with these metals constituting the largest segments of the company.
Furthermore, planned maintenance activities had a detrimental impact on production, as previously disclosed by Hindustan Zinc.
Expenses in Q2FY24 saw a year-on-year drop of 1.4 per cent and a sequential decrease of 5 per cent when compared to the previous quarter. This sequential decrease represents the second consecutive quarterly reduction, primarily due to the decline in the cost of production before royalty (COP) and other input costs.
Hindustan Zinc has upheld its annual estimate for zinc COP within the range of $1,125 to $1,175 per metric tonne, along with its forecasts for mined metal production and capital expenditure.
Towards the end of the previous month, Hindustan Zinc unveiled its intention to establish separate entities for its zinc, lead, silver, and recycling divisions, a strategic move aimed at unlocking potential value. Parent company Vedanta is also pursuing a similar plan to divide into separate business entities.
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