JSW Steel Q2 results: Net profit plunges over 85% to Rs 404 crore

India's JSW Steel reported a bigger-than-expected slide in second-quarter profit on Friday as higher imports of cheap finished steel dragged domestic prices to multi-year lows amid subdued demand.

 

The country's biggest steelmaker by market cap reported a six-fold decline in profit to Rs 439 crore ($52.23 million) for the quarter ended June 30.

 

Analysts, on average, had expected profit to decline 78%, as per LSEG data.

 

Steelmakers in India have been battling an influx of cheap imports, mostly from China, followed by South Korea and Vietnam, denting local prices.

 

This has led the steel ministry to back a temporary "safeguard duty" to help curb Chinese imports. An investigation has also been initiated on certain products imported from Vietnam to analyse their impact on domestic industry.

 

 

Domestic steel prices dropped to an over three-year low in the quarter, as per data from commodities consultancy BigMint.

 

Saleable steel sales dropped 3.3% in the July-September period to 6.13 million tonnes, JSW Steel said in a statement. Production rose 7% to 6.77 million tonnes.

 

Steel demand in the quarter remained lackluster as higher-than-normal rainfall in the country slowed activity in the infrastructure and auto sectors - key clients for steelmakers.

 

The company's revenue from operations fell 11% to Rs 39,684 crore, which also fell short of analysts average estimate of 423.26 billion rupees.

 

The company cut its capex spending for the current fiscal year to between Rs 16,000 crore and Rs 17,000 crore, from the Rs 20,000 crore expected earlier.

 

JSW Steel's shares were down 2.5% after the results, extending decline from earlier in the session.