Hindustan Zinc Limited ("HZL"), the leading global integrated producer of zinc, lead, and silver, reported its results for the fourth quarter and full year ended March 31, 2024.
Operational Performance
Mined metal production for the quarter was 299 kt, up 11 per cent sequentially, driven by higher ore production across mines, further supplemented by improved mined metal grades, but marginally down y-o-y. The full year mined metal recorded the best-ever production of 1,079 kt, up 2 per cent y-o-y on account of improved mined metal grades.
Refined metal production for the quarter stood at 273 kt, its highest-ever. The production was up 6 per cent sequentially on account of better plant availability, and up 1 per cent y-o-y. Refined metal production for the full year stood at its highest-ever, reaching 1,033 kt, marginally up y-o-y.
Refined zinc production for the quarter was 220 kt, up 9 per cent sequentially and 2 per cent y-o-y. Refined lead production for the quarter was 53 kt, down 5 per cent sequentially and 2 per cent y-o-y. For the full year, refined zinc production stood at 817 kt, marginally down y-o-y, and refined lead production was at 216 kt, up 3 per cent y-o-y, on account of pyro operations being operated on lead mode for longer duration during the year to maximise silver production.
Saleable silver production for the quarter was 189 MT, down 4 per cent q-o-q in line with lead metal production, partly offset by WIP depletion, and up 4 per cent y-o-y on account of WIP depletion during the quarter. Full year saleable silver production stood at its ever highest of 746 MT, up 5 per cent y-o-y in line with lead metal production.
Financial Performance
Revenue from operations during the quarter was Rs 7,549 Crore, up 3 per cent q-o-q on account of better zinc volumes partly offset by lower lead and silver volumes, and lower metal prices. The revenue plunged by 11 per cent y-o-y on account of significantly lower zinc and lead prices and lower lead volume, partly offset by increased zinc and silver volumes, silver prices and favourable exchange rates.
Revenue from operations for the full year stood at Rs 28,932 crore, down 15 per cent y-o-y on account of lower zinc prices and volumes, and strategic hedging impact in base period partly offset by better silver and lead volumes and prices, and favourable exchange rates.
Zinc cost of production before royalty (COP) for the quarter stood at US$ 1,051 (Rs 87,284) per MT, lower by 4 per cent q-o-q and 13 per cent y-o-y in both US$ and Rs terms. Zinc COP for the full year was US$ 1,117 (Rs 92,470) per MT, down by 11 per cent y-o-y (8 per cent lower in Rs terms). Cost improvement is majorly on account of better grades, softened coal and input commodity prices and better linkage coal materialisation partly offset by lower acid realisation.
EBITDA for the quarter was Rs 3,637 crore, up 2 per cent q-o-q and down 14 per cent y-o-y in line with the revenue from operations and cost, and for FY24, EBITDA was Rs 13,677 Crore, down 22 per cent y-o-y, mainly on account of lower revenue partly offset by cost improvement.
Net profit for the quarter stood at Rs 2,038 crore, marginally up sequentially and down 21 per cent y-o-y. FY24 net profit was at Rs 7,759 crore, down 26 per cent y-o-y, primarily on account of lower EBITDA partly offset by lower tax expense.
Reserves & Resources (R&R)
Total R&R as on March 31, 2024 stood at 456.3 million tonnes containing metal of 30.8 million tonnes (net of production of 1.1 million tonnes in FY24). At current mining rates, the R&R underpins metal production of more than 25 years. In last 5 years, the R&R has increased by 35 per cent (incremental ore of 118 million tonnes) considering production of 65.1 million tonnes of ore in this period.
Total ore reserves stand at 175.1 million tonnes (net of production of 16.5 million tonnes in FY24) at the end of FY24 (173.5 million tonnes at the end of FY23) led by continued focus on resource to reserve conversion during the year. Exclusive mineral resources totalled 281.2 million tonnes. Contained metal in ore reserves is 9.9 million tonnes of zinc, 2.8 million tonnes of lead and 312.2 million ounces of silver. The mineral resources contain 12.7 million tonnes of zinc, 5.5 million tonnes of lead & 542.1 million ounces of silver.
Projects Update
· Fumer and alloy plant have already commenced their commercial production in Q2 & Q3 FY24 respectively. Full ramp up is currently underway.
· New Roaster at Debari of 160 ktpa and Hindustan Zinc Fertilisers Private Limited (HZFPL) of 510 ktpa: project progress is on track.
· HZL received requisite regulatory approvals for Bamnia Kalan Mines and company is in process of finalising the business partner to start the site activities.
Commenting on the performance, Arun Misra, CEO, said: "FY 2023-24 has been a year of solid growth for HZL, with mined metal, refined metal, and silver recording its highest historic production levels, supported by a backdrop of fatality-free operations. As part of our strategy, it was driven by our increased focus on silver and metal production and cost optimisation. The company withstood the market headwinds during the year, ensuring preservation of margins and shareholder value. Fuelled by our robust silver maximisation strategy, I am thrilled to announce that HZL has now become the 3rd largest silver producer globally. Additionally, during the quarter, HZL also incorporated ‘Hindmetal Exploration Services Private Limited', as a wholly owned subsidiary, with an objective to explore, discover, develop, and tap mineral resources aligning with the national focus and vision.
Our commitment on the sustainability efforts remains robust. I am happy to share that our renewable energy (RE) power delivery agreement of 450 MW is advancing well and the first flow of RE power is now preponed and expected to begin in April'24, contributing to our journey towards achieving net zero targets. Our company has been awarded the CII National HR Excellence Award underscoring our exemplary people practices. With the full implementation of commissioned projects, HZL is poised for another exceptional year ahead."
Sandeep Modi, CFO, said: "Despite the plunging metal prices, HZL has consistently sustained its margin at a steady 47 per cent by recording its fifth consecutive quarter of sustained cost reduction, clocking the lowest cost in last 3 years. This demonstrates the effectiveness of our agile decision-making strategy, with instances such as maximisation of silver production leveraging the soaring silver prices, power plant modifications ensuring better linkage coal consumption thereby lowering the power costs along with operational & commercial efficiencies. I firmly believe that the challenges encountered throughout the year have strengthened our resilience and fortitude, propelling us to strive for even greater performance in the upcoming year towards our aspired annual targets and strong balance sheet."
