 "JSW Steel avoids loss, reports Q2 net profit at Rs 116.9 crore")
As per Bloomberg estimates, the company’s consolidated net sales were seen at Rs 10,932 crore, while its bottomline was expected to incur losses.
Net sales of the company were at lower-than-expected levels at Rs 10,742 crore in the period under review, down 21 percent from same period last year.
“There was a four percent pick up in the volumes during the quarter as the company focussed more on the domestic market, changed the geographical and the product mix. But due to the overall falling trend in steel prices, realisations declined 17 percent on year-on-year basis leading to the fall in the topline in the period under review,” Seshagiri Rao, joint managing director and group chief financial officer said at the earnings conference held here today.
The company lowered its exports to 10 percent of the total sales from 26 percent earlier and focussed on the domestic market especially in the auto, retail and value added product segment, which led to the volume growth in the period under review, said the management.
The company’s EBITDA per tonne stood at Rs 4,900 in the period under review, down significantly from Rs 8,500 in the corresponding period last year but a tad up from the preceding quarter.
JSW Steel’s overseas operations such as the Chile iron ore mines and US plates and pipes mills continued to be a drag on the company’s EBITDA which stood at Rs 1,729 crore in the September quarter.
“Sequentially, net sales realisations and expenses both declined five percent helping the EBITDA per tonne to look up, on year-on-year basis, however, net sales realisation dropped 21 percent while costs did not fall at all, halving the EBITDA/tonne when compared with last year,”said Rao.
The company’s operating profits were also supported by lower expenses which declined 17 percent in the September quarter when compared with the same period last year.
Sequentially, the company’s net sales were down 5.6 percent, while the bottomline had moved into profits from losses reported earlier.
Despite the challenging business scenario, the company is going ahead with its capacity expansion at Dolvi as well as Vijaynagar and has also shut couple of blast furnaces for the same.
“By the end of this calendar year, JSW Steel will see its capacity go to 18 million tonne from 14 million at present. Vijayanagar plant will see an expansion of 2 million tonne, while Dolvi plant will go to 5 million tonne from 3.5 million at present,” he said.
Regarding the outlook on the sector, the company said safeguard duty is needed for the industry on the entire chain of steel products and that imposition on hot-rolled coils alone will not help the industry.
“Domestic demand for steel is stronger than that in the global market but the incremental demand is being met via imports and hence curbing of imports is essential,” he said.
Indian steel industry has been facing increased imports from China, Russia and Free Trade Agreement countries such as Japan and Korea.
Regarding steel prices, the management was of the view that since steel industry overall is going through a tough phase and with China slowdown, prices of steel look under pressure going ahead.