India-focused metals and energy group Vedanta Resources delivered robust full-year revenue growth – reflecting contributions from recently acquired Cairn India and Zinc International. Although earnings were hit by exchange and hedging losses, as well as hefty finance costs relating to the Cairn India acquisition. While, with base metals prices softening, the shares could tread water – despite an undemanding rating.
Still, the Cairn India deal did help push cash profits up 12.9 per cent to $4.03bn (£2.53bn) – higher coal costs and commodity-linked costs, says management, explain the failure of profits to keep pace with revenue growth. There were also significant contributions from Vedanta’s zinc, power and silver segments – but performance was held back by losses at the aluminium arm. Vedanta's iron ore subsidiary, Sesa Goa, suffered a 27 per cent fall in volumes, too, and had to contend with a rise in export duties.
Apart from this year’s acquisitions, investments in existing assets has bolstered production – most notably silver and lead – and Vedanta has now invested $14bn of its $18bn capital expenditure programme. Although, in common with industry rivals, Vedanta is struggling to keep a lid on cash costs, which increased over the period.
Morgan Stanley expects cash profits of £5.96bn for 2012, giving EPS of 390¢.
| VEDANTA RESOURCES (VED) | ||||
|---|---|---|---|---|
| ORD PRICE: | 991p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 989-991p | 12-MONTH HIGH: | 2,204p | LOW: 896p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 72 | |
| NET ASSET VALUE: | 1,566¢ | NET DEBT: | 55% | |
| Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 8.20 | 2.76 | 305 | 41.5 |
| 2009 | 6.60 | 1.18 | 76.0 | 41.5 |
| 2010 | 7.90 | 1.84 | 220 | 45.0 |
| 2011 | 11.4 | 2.68 | 283 | 52.5 |
| 2012 | 14.0 | 1.75 | 21.9 | 55.0 |
| % change | +23 | -35 | -92 | +5 |
Ex-div: 15 Aug Payment: 5 Sep £1=$1.59 | ||||
