Vedanta, the Indian resources group that runs mines from Ireland to Australia, saw its earnings more than halve in the last three months of 2015, as the commodities rout continued to rock the company.
Vedanta’s earnings before interest, tax, depreciation and amortisation (ebitda) fell 51 per cent year-on-year to $493.6m in the three months to December, writes Joel Lewin.
The aluminium division suffered the steepest decline, with ebitda down 84 per cent to $20.9m, followed by the oil and gas division, where ebitda dropped 72 per cent to $95.5m.
Vedanta’s earnings from zinc fell 45 per cent year-on-year to $217.6m. The international zinc business saw its earnings entirely erased, declining from $63.2m in the same period last year to a loss of $0.2m. This week the company said it had closed an Irish zinc mine after 17 years of operations.
The company’s Zambian copper division is set to suffer a $3m per month jump in production costs due to a 25 per cent jump in power tariffs from 1 January 2016. The business was also hit by a drop in production when its Nchanga underground operations were put into care and maintenance. Overall the business’ revenue fell 34 per cent to $195.5m.
Tom Albanese, chief executive, said:
In the weak commodity price environment, we remain committed to optimising our operations, leveraging our high quality asset base, and proactively managing our balance sheet.
I am encouraged to see the positive results of our cost reduction programme gaining momentum, and believe that this relentless focus on efficiency will not only make our business more resilient through the cycle but position us favourably for any future improvement in market conditions. Despite challenging market conditions, these efforts have allowed us to generate a robust EBITDA margin of 23%.