Analyst Concall
JSW Steel sees Oct-Dec net realisation similar to Jul-Sept
This story was originally published at 22:52 IST on 25 October 2024
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--JSW Steel: Maintaining FY25 sales volume guidance of 27 mln tn
--CONTEXT: JSW Steel mgmt comments in post-earnings analyst concall
--JSW Steel: Maintaining FY25 production volume guidance of 28.4 mln tn
--JSW Steel: Saw strong price headwinds in September
--JSW Steel: See better spreads Oct-Dec amid price uptick, cost decline
--JSW Steel: Increased flat, long steel pdt prices in Oct
--JSW Steel: Ohio, US, volume output fell Apr-Sept on maintenance shutdown
--JSW Steel: Ohio, US, production volume will be back to normal in Oct-Mar
--JSW Steel: Jul-Sept captive iron ore use 41% vs 38% Apr-Jun
--JSW Steel: See Oct-Dec average net realisation similar to Jul-Sept
By Rajesh Gajra
MUMBAI – The average net sales realisation from JSW Steel Ltd.'s India operations in the December quarter will be similar to that in the quarter ended September, the company's management said in a post-earnings conference call Friday. The management said steel prices fell steeply in September amid strong price headwinds, but the intensity was not the same in July and August.
The company's net sales realisation from India operations fell 5% sequentially and 7% on year in the September quarter due to lower domestic steel prices. The management said that although the company has taken price increases in October, the average net realisation in Oct-Dec will be similar to that of in the September quarter.
JSW Steel's management also said that it was retaining its production volume guidance of 28.4 million tonne and sales volume guidance of 27 million tonne for 2024-25 (Apr-Mar). In Apr-Sept, the company produced 13.12 million tonne steel, 3% higher on year, and sold 12.25 million tonne steel, up 2% on year. By retaining FY25 guidance, JSW Steel is confident of producing 15.28 million tonne and selling 14.75 million tonne steel.
The company said it was "by and large on track to achieve (the full-year guidance) with the new capacity (too) coming on stream." The US operations were a drag on steel production and sales in the first half of the year ended September. While production from India operations was up 3% on year to 12.75 million tonne in Apr-Sept, that from US operations declined 2% on year to 0.37 million tonne.
Similarly, sales volume from India operations was up 2% to 11.86 million tonne in Apr-Sept but that from US operations declined 1% to 0.39 million tonne. Sales from India operations comprise domestic sales and exports. In the September quarter, sales from India operations were badly hit due to a substantial fall in exports--by 38.2% on year--to 0.42 million tonne amid a rise in Chinese crude steel exports. The company's domestic sales were less affected and inched up 0.7% to 5.54 million tonne in Jul-Sept.
JSW Steel expects restocking demand and demand from institutional customers to drive growth. On iron ore pricing front, the company said, "internationally...prices inched up after the China stimulus...but have now again moderated a bit. We feel the domestic iron ore prices will also moderate from the increase announced by NMDC in this month." In the September quarter, the company benefitted from its captive iron ore share moving up to 41% from 38% in the June quarter.
JSW Steel's consolidated net debt rose 6.1% to INR 851 billion at the end of September from that in June-end. The increase came on the back of new loans of INR 61.3 billion taken to fund capex for ongoing expansion projects, acquisition of 20% stake in an coking asset in Illawarra, Australia, and an increase in working capital. Repayments amounted to INR 16 billion in the September quarter. The September quarter capex was INR 33.84 billion.
The management said that while the capex factor will remain in Oct-Mar, it expects working capital to decline due to inventory liquidation during peak consumption season in the second half of the current financial year. Overall, the company expects net debt to reduce in Oct-Mar. It is also banking on incremental operating profit rising on the back of higher volumes during this period.
Friday, shares of JSW Steel closed 1.5% lower at INR 943.85 on the National Stock Exchange. End
Edited by Deepshikha Bhardwaj
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