Vedanta tarnished by commodities rout but predicts “new era” in India
Shares in London-listed Vedanta Resources tumbled 2.7 per cent to 369.7p per share this afternoon, as the miner continued to suffer amid the commodities rout.
The figures
The India-based firm's revenue slumped 16.6 per cent to $10.7bn (£7.4bn) in the 12 months to 31 March, down from $12.9bn a year earlier.
This came on a pre-tax loss of $5bn, which was slightly better than a loss of $5.6bn last year.
The group also took a $5.2bn pre-tax impairment charge on its oil and gas business, due to low oil prices.
Ebitda – another measure of profitability – fell 38 per cent to $2.3bn during this period, compared to $3.7bn in 2014.
But cost-cutting helped it shrink Ebitda margins to 27.6 per cent, down from 29.1 per cent a year ago.
The board more than halved its dividend to 30 cents per share, a move it described as "prudent" given the current commodities cycle.
Why it's interesting
Vedanta's chief executive, Tom Albanese, an industry veteran who is also the former boss of mining giant Rio Tinto, said that the commodity price rout was coming to an end.
"I have heard people say that this turbulence is the 'new normal', but throughout my four decades of mining experience, this has always been the case. Volatility is a continual 'normal'," Albanese said today.
"We have seen it many times and we know that low prices serve as a self-correcting mechanism for markets, by adjusting supply and demand – we see this happening now."
Albanese also expressed confidence regarding the outlook regarding Vedanta's specialist metal Zinc.
"We are seeing a progressive tightening in zinc fundamentals," he said on a media call.
What Vedanta said
"As we close the financial year 2016, there is a clear sense within Vedanta that we are in a new phase in our development as India forges ahead with economic change," it said.
"We see a new era dawning, slowly but nonetheless surely, as India takes advantage of its rich human and natural resources to create economic growth and employment to the benefit of its 1.2bn people, who form part of the largest democracy in the world."
"This positive outlook contrasts with what has been a very tough year in the commodities space. We continue to feel the effects of the downward cycle – but we also know that history tells us to be patient. We are optimistic about the longer term and intend to be in the right place for when the upturn begins."
In short
Vedanta continued to be punished by the commodities rout, however Albanese believes the worst is over, as the firm eyes future growth opportunities in India.