A strong first-half showing from Vedanta Resources (VED) primarily reflects the contribution of the group's oil and gas segment in the wake of last year's Cairn India deal. More importantly, the India-focussed group confirmed that it is still on track to complete the much needed rationalisation of its corporate structure, although full-year expectations will be held in check by "tapering global growth".
Improved margins underpinned a 49 per cent rise in cash profits to $2.56bn (£1.6bn). A depreciating Indian rupee resulted in a $170m foreign exchange gain, while net profits benefitted from a steep fall in the effective tax rate to 12 per cent (37 per cent in 2011).
The overall profit performance was achieved despite falling contributions from the group's zinc, iron ore and copper businesses, which normally account for the lion's share of profits. In all, lower average prices had a $539m negative impact on operating profits. Faltering metals prices were the main problem, although iron ore production was constricted by a year-long ban on mining in Karnataka and restrictions on the transport and extraction of iron ore in Goa. There was better news from both Vedanta's Zambian copper and Indian power generation units, both of which hit record output.
Prior to these figures, RBC Capital anticipated full-year EPS of 227¢ (22¢ in 2012), rising to 292¢ the year after.
| VEDANTA RESOURCES (VED) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,137p | MARKET VALUE: | £3bn | |
| TOUCH: | 1,135-1,137p | 12-MONTH HIGH: | 1,564p | LOW: 821p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 1,727¢ | NET DEBT: | 52% | |
| Half-year to 30 Sep | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 6.55 | 0.92 | 10.2 | 20 |
| 2012 | 7.45 | 1.06 | 62.8 | 21 |
| % change | +14 | +16 | +516 | +5 |
Ex-div: 21 Nov Payment: 19 Dec £1=$1.60 | ||||
