Vedanta group firm Hindustan Zinc Ltd (HZL) reported a 21  percent year-on-year drop in its fourth quarter net profit at Rs 2,038 crore, hit by depressed zinc prices globally as demand is growing at a slower pace than supply.

The company reported consolidated net profit of Rs 2,583 crore in the same quarter previous year.  On a sequential basis, net profit rose 0.5% from Rs 2,028 crore in Q3.

HZL's revenue from operations in the reporting quarter stood at Rs 7,285 crore, a 12 percent fall from Rs 8,281 crore posted a year ago. On a quarter-on-quarter basis, the revenue was higher by 3 percent.

The consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) was Rs 3,637 crore for the quarter under review, compared to Rs 4,208 crore in the same quarter last year, a 14 percent fall on-year.

The fall in revenue is due to  significantly lower zinc & lead prices and lower lead volume, partly offset by increased zinc & silver volumes, silver prices and favourable exchange rates, the company said.

The prices of essential industrial metals such as copper, aluminium, zinc, and lead have surged significantly since April due to concerns regarding supply limitations. However, price increases resulting from production cuts are unlikely to be sustained until there is a significant uptick in zinc demand and the market shifts its focus away from anticipated surpluses of the metal.

"Despite the plunging metal prices, HZL has consistently sustained its margin at a steady 47% by recording its fifth consecutive quarter of sustained cost reduction, clocking the lowest cost in last 3 years," the company's chief financial officer Sandeep Modi.

Shares of HZL on April 19 were trading 1.42 percent lower at Rs 399 apiece after Q4 earnings were declared.

Record production

For FY24, mined metal production at a record 1,079 kilotonne (KT) was up 2 percent from the previous year, driven by improved mined metal grades, the company said in a statement released earlier in the month.

Mined metal production in the March quarter stood at 299 KT, up 11 percent from the previous quarter, led by a mix of improved mined metal grades and higher ore production across mines.

Meanwhile, the company recorded its highest silver volume in FY24 at 24.0 moz, up 5 percent YoY. Refined lead production was at 216 KT, up 3 percent YoY, according to the statement.

FY25 outlook

Both mined metal and refined metal production in FY25 is expected to be higher than last year, given the ramp-up of all major projects commissioned in the last year and better capacity utilization, the company said.

Hindustan Zinc projects FY25 mined metal production  between 1,100-1,125 kt & refined metal production in the range of 1,075-1,100 kt.   FY25 saleable silver production is projected to be between 750-775 MT.

Zinc cost of production in FY25 is expected to be in between US$ 1,050-1,100 per MT. Project capex for the year is expected to be in the range of US$ 270-325 million.