Vedanta Resources Outperforms Deleveraging Targets, Expects EBITDA of $ 6.5 Bn in FY 25

• $3.7 Billion debt cut in two years; a year earlier than the target. Company plans further debt reduction of $3 Billion in the next 3 years, of which ~ $0.5 bn already achieved in first two months of FY25. 

• Record FY25 EBITDA growth to be supported by volume growth from ongoing projects, cost efficiency and metal prices; robust free cash flow strengthening the deleveraging strategy. 

• Significant improvement in bond yields as bonds trade near face value, reflecting balance sheet and enhanced credit strength, opening doors to more flexible refinancing rates.

BILKULONLINE

Ahmedabad, May 31: London-based Vedanta Resources Limited (VRL) closed the financial year 2024 with a strong operational performance on the back of high metal production numbers and cost efficiencies. The company expects record EBITDA growth in FY25.  

VRL outperformed its deleveraging targets by reducing debt by $3.7 Billion in two years which is a year earlier than the target. The company plans further debt reduction of $3 Billion in the next three years, of which ~ $0.5 bn has already been achieved in first two months of FY25.

The company expects a record EBITDA of $6.5 billion during the current fiscal supported by volume growth from ongoing projects, cost efficiency and metal prices while the robust free cash flows will continue strengthening the deleveraging strategy.

These strengths have benefitted VRL’s bonds that have seen significant improvement in yields as they trade near face value, reflecting balance sheet and enhanced credit strength. This further opens door to a more flexible refinancing rate for the company.

For FY24, VRL recorded its second highest EBITDA of $4.7 billion on a revenue of US$ 17.1 billion. Its business units delivered the highest ever production of silver, cast metal aluminium and other key metals. The company delivered an industry leading adjusted EBITDA margin of 32% while reducing its gross debt by $1 billion. Cost savings resulted in an increase in EBITDA by US $287 million, enabling the company to close the year with cash & cash equivalents of US$2.0 billion. VRL delivered a strong return on capital employed (ROCE) at c.25% in FY 2023-24, up 512 bps year on year, compared to 20% in FY22-23.

VRL’s Zinc India unit achieved highest ever silver production at 746 tonnes, representing a 5% year on year growth. The company’s aluminium division witnessed record cast metal aluminium production at 2,370 kt, up 3% YoY. VRL’s Iron Ore business achieved highest ever sales of Iron from its mines in Karnataka, India at 5.9 million dry metric tonnes (DMT), emerging as the largest iron ore exporter from the state.

The Group’s listed Indian entity – Vedanta Limited recently proposed a vertical split of the businesses and will list five entities on the Indian bourses, which is expected by the end of this year.  As per the plan, it will be a simple vertical split, where for every one share of Vedanta Limited, the existing shareholders will additionally receive one share of the five newly listed companies.

The demerger will create independent companies housing the aluminium, oil & gas, power, steel and ferrous materials, and base metals businesses, while the existing zinc and new incubated businesses will remain under Vedanta Limited.