Sterlite Profit Misses Estimates on Lower Metal Prices

Sterlite Industries (India) Ltd. (STLT), the nation’s biggest copper producer, missed analysts’ profit estimates for a third straight quarter as prices fell and it paid damages to Asarco LLC for failing to buy the company.

Group net income fell 34 percent to 12.8 billion rupees ($244 million) in the three months ended March 31 from 19.3 billion rupees a year earlier, the unit of Vedanta Resources Plc (VED) said today in a statement to the stock exchanges. The median profit of 24 analyst estimates compiled by Bloomberg was 13.3 billion rupees. Sales rose 8 percent to 107.6 billion rupees.

The price of aluminum, used to make products from aircrafts to beverage cans, averaged 13 percent lower, while copper fell 14 percent in the last quarter on the London Metal Exchange. The Indian rupee averaged 10 percent lower in the period.

Grupo Mexico SAB’s Asarco on Feb. 13 won $82.8 million in a lawsuit against Sterlite for walking away from an agreement to buy the company out of bankruptcy. Sterlite blamed a drop in copper prices for failing to complete the deal.

The demand for metals will improve this fiscal year because of growth in emerging markets like China and India, Vice Chairman Navin Agarwal said in an analyst call after the results. Chinese growth is expected to continue, while Indian growth may have bottomed out, he said.

Rising Expenses

Sterlite’s total expenses gained 13 percent to 8.3 billion rupees in the period. The cost of power and fuel jumped 46 percent to 9.9 billion rupees.

Shares of Mumbai-based Sterlite rose 2.1 percent to 107.95 rupees at close of trading in Mumbai. The stock has risen 20 percent this year, compared with an 11 percent increase in the key Sensitive Index. The results were announced after market hours.

Losses from exceptional items, including the payout to Asarco, surged more than 13 times to 4.32 billion rupees in the quarter, compared with 315.6 million rupees a year earlier. Income from sources other than its main business fell to 7 billion rupees from 7.46 billion rupees, according to the statement.

Hindustan Zinc Ltd. (HZ), the nation’s largest producer of the metal and a unit of Sterlite, reported a 20 percent decline in fourth-quarter profit on April 19 because of lower prices. Zinc, required to rust-proof steel, averaged 16 percent lower in the last quarter.

Billionaire Anil Agarwal, who owns the Vedanta group, offered 170 billion rupees to buy the Indian government’s remaining stakes in Hindustan Zinc and Bharat Aluminium Co., a mines ministry official said March 22. Buying the stakes will give Sterlite control over a combined 964,000 tons of zinc and lead-producing capacity and a 2 million-ton bauxite mine.

Vedanta Resources plans to combine its publicly traded Indian units into a new company, the London-based company said on Feb. 25. Unit Sesa Goa Ltd. (SESA) will absorb Sterlite in an all- stock deal.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.