Vedanta Resources plc Hit By Falling Revenue

The shares of Vedanta (LSE: VED) dropped a little over 4% to this morning to 801p, as it reported a fall in revenue of 3% during the final three months of 2013, primarily as a result of income declining from zinc and aluminium. The stock has fallen 30% over the last 12 months.

Total group revenue was $3.45 billion from $3.58 billion a year prior. While revenue from zinc fell 14%, oil and gas revenue increased by 2% on the previous year. Revenue from copper stayed flat.

During the same period the company reported higher profit, driven by its oil, aluminium and copper divisions, offsetting lower profit from its international zinc operations.

The India focused company downgraded its production forecast for several metals, including zinc and copper. The company is focusing on a turnaround – in Zambia, for example, it is hoped that by transitioning to a higher degree of mechanized mining that volumes, productivity, costs and profitability will improve.

Oil and gas output were a bright spot with gross production rising by 10% in the quarter. Both oil and gas added up to half of operating profit during October, November and December. The gains were driven by the production ramp-up at Rajasthan, which proved an extremely reliable operation with an uptime of 99%.

Prior to today, City experts were expecting Vedanta’s upcoming annual results to show earnings at 25p per share and a dividend of roughly 35p per share.

Following this morning’s price movement, the shares may therefore trade on a P/E of 22 and offer a potential income of around 4%

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the telecoms sector — is solely your decision.

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Mark owns no shares mentioned in this article.