National Aluminium Profit Falls on Higher Fuel Costs (Update1)

Jan. 27 (Bloomberg) -- National Aluminium Co., India’s second-biggest producer, posted a decline in profit for the fifth consecutive quarter as higher fuel costs muted earnings.

Net income fell 22 percent to 1.55 billion rupees ($33.4 million) in the three months ended Dec. 31 from 2.19 billion rupees a year earlier, the Bhubaneswar-based company said today in a statement. Sales rose 36 percent to 13.86 billion rupees.

Electricity expenses, which account for about 40 percent of the cost of smelting aluminum, rose after state-owned monopoly Coal India Ltd. increased prices by an average 11 percent in October. Rival Hindalco Industries Ltd., India’s largest aluminum producer, also reported a 22 percent drop in profit on higher costs.

“The profit numbers have been disappointing,” said Pawan Burde, vice president at PINC Research in Mumbai. “The fourth quarter may be better, provided they are able to cut their costs.” Burde has a “sell” recommendation on the stock.

Power and fuel costs rose more than 22 percent to 4.4 billion rupees in the quarter because of higher coal prices, the statement said.

The company’s shares fell 2.4 percent to 406.90 rupees at close of trading in Mumbai. The shares more than doubled last year, compared with an 81 percent gain in the Bombay Stock Exchange’s benchmark Sensitive Index.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net.