Vedanta aluminium and copper production rises, but revenues slump

FTSE 100 constituent miner Vedanta Resources (LSE: VED) reported a 32% slide in revenues, blaming the slumping commodity prices, yet said production increased in all of its businesses. The company released its quarterly report for Q1(ended 30 June 2009) this morning, revealing a 32.8% year on year drop in revenues to USD 1.36 billion and a 52% decline of total EBITDA (earnings before tax, interest, depreciation and amortisation) to USD 354.7 million. At the same time, the company’s production volumes were up sharply. Aluminium production jumped to 125,000 tonnes, helped by the progress in Vedanta’s key aluminium projects. The firm said it has commissioned the first phase of the 500 ktpa (kilo tonnes per annum) Jharsuguda aluminium smelter, currently starting the commissioning of the second phase, which is scheduled for completion by the end of financial year 2010. Vedanta’s copper production also increased significantly as the company produced 78,000 tonnes of copper cathodes in India, marking a 10,000 tonne hike from Q1 2008 and 43,000 tonnes of copper cathode in Zambia, an increase of 7,000 tonnes from the corresponding prior quarter. Yet these impressive gains did little to help the financial performance, only partially offsetting the humongous losses stemming from the changed market conditions as the demand was low, causing base metal prices to shed as much as 30-40%. The plummeting commodity prices resulted in the loss of about USD 525 million, while the positive effect from the increase in production volumes and lower costs amounted to USD 175 million. The results seemed to meet market expectations as Vedanta was unmoved following the release of the report in the morning. source:proactiveinvestors.co.uk