Vedanta core profit up 6.3 percent on higher output

By Eric Onstad

LONDON (Reuters) - India-focused metals group Vedanta Resources (VED.L) posted a 6.3 percent rise in first-quarter core earnings on Tuesday as higher output in most of its metals outweighed weaker zinc prices and higher costs.

Vedanta said earnings before interest, tax, depreciation and amortisation (EBITDA) increased to $739 million (371 million pounds) on revenue which grew 9.2 percent to $2.02 billion.

Vedanta shares, which have shed 7.5 percent so far this year and have underperformed the UK mining index .FTNMX1770 by 5 percent, rose 2.3 percent to 1,895 pence by 9:09 a.m..

The UK mining index was 2.1 percent firmer.

"It was a solid quarter," analysts at brokerage Cazenove said in a research note. "We see Vedanta set fair for another solid year of double-digit organic growth in FY09, which remains its defining feature compared to its peers."

Michael Rawlinson at Liberum Capital said first-quarter EBITDA was running 18 percent below the level needed to meet consensus forecasts of $3.57 billion for the full year, but this should be achievable as output increases and the price of iron ore and aluminium remains high.

The group said refined zinc production in the three months to the end of June jumped 38 percent to 128,000 tonnes due to the opening of its new Hydro II smelter at Chanderiya, which began operating in December and is now near full capacity.

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