(Reuters) - Vedanta Resources Plc (VED.L) posted a full-year loss after a sharp drop in crude prices precipitated a $4.5 billion (£2.85 billion) writedown related to its Indian oil and gas business.
The company’s London-listed shares fell as much as 4 percent early on Thursday before recovering to 660 pence, unchanged from the previous day’s close.
Best known as a mining company, Vedanta bought a controlling stake in Cairn India Ltd (CAIL.NS), India’s largest private-sector oil producer, in 2011.
Like other resources companies, it has struggled with plummeting commodity prices in the last year. Brent crude .LCOc1 collapsed to a low of just above $45 a barrel in January from a high of $115 last June.
Vedanta Resources on Thursday reported a 17 percent drop in full-year core earnings, which Chairman Anil Agarwal attributed in part to “unprecedented declines” in oil and iron ore prices.
Vedanta’s Indian unit, Vedanta Ltd (VDAN.NS), had already given notice of the impairment charge when it announced its own full-year results last month. It said the charge was related mostly to its acquisition of Cairn India.
Vedanta Resources also reported a small impairment charge related to its copper operations in Zambia.
Vedanta Resources said operating profit from its oil and gas business fell 78 percent. It accounted for about 12 percent of the company’s total operating profit, compared with more than 40 percent a year earlier.
The company, which also operates in South Africa, Namibia, Liberia, Ireland and Australia, said earnings before interest, tax, depreciation and amortisation for the year ended March 31 fell to $3.74 billion.
Net loss attributable to Vedanta Resources’ equity holders was $1.80 billion, compared with $196 million a year earlier.
Full-year revenue was little changed at $12.88 billion.
On a call with reporters, Chief Executive Tom Albanese said he expected commodity prices to improve gradually.
“The current oversupply positions in some of these products will be progressively whittled away by the continued - albeit slower - demand growth in most of the commodities we produce,” he said.
Editing by Robin Paxton