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Vedanta, an Indian mining company, misses its quarterly profit forecasts due to weak aluminium prices

Vedanta, an Indian conglomerate that converts metals into oil, missed its quarterly profit forecast on Thursday as lower aluminum and copper prices and increased tax expenses outweighed the impact of a strong local demand.

Vedanta’s aluminium business in India is the largest and accounts for nearly 40% of its revenue. Copper is followed by zinc as the company's second largest business.

During the quarter under review, benchmark aluminium and copper prices fell 4% and 4,1% respectively on an annual basis, due to geopolitical tensions, and uncertainty over U.S. Trade policies.

Mining companies tend to see their margins and selling prices affected by lower commodity prices.

Vedanta’s total revenue increased 6.2% on an annual basis to 374.34 billion Rupees ($4.3billion) for the quarter ending June 30. This was driven by increases in revenue from copper and aluminium, which both grew by 7.7% and 34.6% respectively.

The net profit of the company has decreased to 31,85 billion rupees, from 36.06 billion a year earlier.

LSEG data shows that analysts, on average, predicted a profit of approximately 34.83 billion rupees.

The company's earnings before taxes, interest, depreciation, and amortization increased by about 2%, to 60.53 billion rupies, while its tax expenses rose to 15.96 billion rupies from 8.31 billion rupies a year earlier.

Vedanta’s operating profit margin was flat at 21%.

Vedanta subsidiary Hindustan Zinc reported a higher-than-expected profit in the first quarter, thanks to a strong demand for metal that helped offset the price impact. $1 = 87.6050 Indian Rupees (Reporting and editing by Manvi Pan and Anuran Sahdhu)

(source: Reuters)