Twin treat for Hind Zinc

Hindustan Zinc is reaping the twin benefits of spiralling zinc prices and well-timed capacity expansion. The numbers posted by the company for the quarter ending June ’06 are even better than that in the last quarter. Net profit margin rose to 54% from just under 50% last quarter. Since the firm has captive sources of ore, the entire benefit of higher metal prices adds to its profit.

Net sales were at Rs 1,610 crore, 206% higher than last year, but 9% lower than the previous quarter. Net profit at Rs 874 crore was up 503% YoY, and 9% higher than last quarter. Currently, it is enjoying over an 80% operating profit margin. Its profit before margin is at 76%.

The rise in the fortunes can be attributed to volumes as well as pricing gains. Refined zinc production is up 45%, while lead production is higher by 103%, compared to last year. Average zinc prices during the last quarter were more than 150% higher than last year. Lead prices were also up 20%. Overall expenditure is under control with total expenditure only increasing 22%, with the only noticeable increase coming from mining royalty payments.

The price trend for lead and zinc on the LME has again turned positive after a slight dip. Prices may remain strong, which translates into a further continuation of the superlative performance by the firm in the last two quarters.