Earnings Review
JSW Steel Apr-Jun EBITDA hit by lower volume, inventory loss
This story was originally published at 22:06 IST on 19 July 2024
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--JSW Steel: Apr-Jun consol net profit 8.45 bln rupees
--Analysts saw JSW Steel Apr-Jun consol net profit 11.35 bln rupees
--JSW Steel: Apr-Jun consol revenue 429.43 bln rupees
--JSW Steel: Apr-Jun consol net profit 8.45 bln rupees vs 23.38 bln
--JSW Steel: Apr-Jun consol revenue 429.43 bln rupees vs 422.13 bln
--JSW Steel: Apr-Jun consol steel sales 6.12 mln tn vs 5.71 mln yr ago
--JSW Steel: Apr-Jun consol operating EBITDA 55.10 bln rupees
--JSW Steel: Apr-Jun consol steel sales 6.12 mln tn, down 9% on qtr
--JSW Steel: Apr-Jun domestic steel sales 5.31 mln tn, up 3% on qtr
--JSW Steel: Apr-Jun EBITDA margin 12.8%
--Consol net debt 802 bln rupees as of Jun 30
--JSW Steel: Apr-Jun consol EBITDA 55.1 bln rupee vs 61.2 bln qtr ago
--JSW Steel: Apr-Jun consol EBITDA 55.1 bln rupees vs 70.5 bln yr ago
By Rajesh Gajra
MUMBAI – Fall in sales volume marred JSW Steel Ltd's topline sequentially in the June quarter, while inventory losses and costs pertaining to planned shutdowns hit its operating profit. The bottomline fell in line with the fall in revenue and operating profit.
The company's sales volume fell 9% on quarter to 6.12 mln tn due to lower exports. It was anticipated to the extent of planned maintenance shutdowns at Dolvi and BPSL plants. JSW Steel's consolidated revenue was down 7.2% sequentially to 429.43 bln rupees.
The company's earnings before interest, taxes, depreciation, and amortisation, fell nearly 10% on quarter to 55.1 bln rupees. The EBITDA margin contracted to 12.8% in Apr-Jun from 13.2% in the previous quarter.
The company said that lower coking coal prices and iron ore costs benefitted Indian operations, but these were "more than offset by inventory losses and planned shutdown costs." In a post-earnings call with investors and analysts today, the company's management said that the inventory losses were due to devaluation.
In the June quarter, the company was faced with not just the spectre of volume fall but also a tough pricing environment. The prices of flat steel products went up in April and May but under pressure of imports from China, Vietnam, and some other countries they went down, the company management said. "So the positive impact of Apr-May price was reversed in June," it said.
The company management said that "Inspite of a softer price environment we were able to raise our realisations due to a better product mix allocation in the domestic market." The net sales realisation was up 1% in June quarter from the previous quarter.
But compared to the year-ago quarter the net sales realisation fell 5% on lower domestic steel prices. This is despite the company's sales volume rising 7%. The revenue went up 1.7% on year. JSW Steel's EBITDA also fell 21.8% on year on the back of revenue softness as well as due to losses in net realisable value in the company's US operations. The 12.8?ITDA margin in the June quarter was much lower than the 16.7% in the year ago quarter.
The company's bottomline tracked the revenue and EBITDA. The consolidated net profit fell 35% on quarter and 64% on year to 8.45 bln rupees.
JSW Steel's guidance of consolidated volume for the whole of the current financial year stands at 27 mln tn for sales and 28.4 mln tn for production. The current annual production capacity of the company is 29.7 mln tn of which 28.2 mln tn is in India and 1.5 mln tn is in the US. Another 6 mln tn capacity per annum is under commission.
In the quarter ended June, the finance costs increased by 5.6% on year to 20.73 bln rupees due to a sharp rise in the company's consolidated net debt to 802 bln rupees as of Jun 30 from 668 bln rupees as of a year ago. The net debt was also lower at the end of the previous quarter at 739.2 bln rupees.
The data from the company's investor presentation showed that the net debt to EBITDA ratio worsened to 3 times as of Jun 30 from 2.62 times as of Mar 31. The net debt to EBITDA ratio provides a rough indication of the number of years a company would take to pay back its debt.
Today, shares of JSW Steel closed 4.5% down at 889.45 rupees on the National Stock Exchange. End
Edited by Deepshikha Bhardwaj
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