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Informist, Friday, Jan. 24, 2025

 

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--JSW Steel Oct-Dec consol net profit INR 7.17 bln 
--Analysts saw JSW Steel consol net profit INR 6.59 bln 
--JSW Steel Oct-Dec consol net profit INR 7.17 bln vs INR 24.15 bln year ago 
--JSW Steel Oct-Dec consol revenue INR 413.78 bln vs INR 419.40 bln year ago 
--JSW Steel: One-time cost of INR 1.03 bln in Oct-Dec 
--JSW Steel Oct-Dec consol expenses INR 402.50 bln vs INR 388.15 bln yr ago 
--JSW Steel Apr-Dec consol net profit INR 20.01 bln vs INR 75.13 bln yr ago 
--JSW Steel Apr-Dec consol revenue INR 1.240 tln vs INR 1.287 tln year ago 
--JSW Steel Oct-Dec consol operating EBITDA margin 13.48% vs 17.12% year ago 
--JSW Steel Oct-Dec consol operating EBITDA INR 55.79 bln 
--JSW Steel Oct-Dec consol operating EBITDA up 3% on quarter 
--JSW Steel: Fall in steel realisations Oct-Dec offset by rise in volumes 
--JSW Steel: Fall in steel prices Oct-Dec offset by lower coking coal cost 
--JSW Steel net debt INR 809.21 bln on Dec 31, dn INR 18.84 bln from Sept 30 
--JSW Steel Oct-Dec India operating EBITDA INR 55.64 bln, down 20% on year 
--JSW Steel Oct-Dec India operations EBITDA per tn INR 8,516 
--JSW Steel spent INR 30.87 bln on capex in Oct-Dec; INR 109.37 bln Apr-Dec 
--JSW Steel Ohio unit Oct-Dec EBITDA loss $15.58 mln as realisations down 
--JSW Steel Oct-Dec India sales realisation dn 10% YoY on lower steel prices 

 

By Aman Aryan

 

MUMBAI – Lower sales realisations amid falling steel prices dragged down JSW Steel Ltd.'s consolidated net profit for the December quarter despite a 12% on-year rise in its consolidated steel sales volume. This was the fourth straight quarter when the company reported a year-on-year decline in net profit.

 

Apart from low steel prices, a one-time expense of INR 1.03 billion also hit the company's earnings for the quarter. However, despite these weak factors, the company managed to beat the consensus estimates for both net profit and revenue. 

 

The steel-maker posted a 70% on-year fall in its consolidated net profit for the December quarter to INR 7.17 billion. This is the third consecutive quarter when the company's earnings were below INR 10 billion. JSW Steel's consolidated net profit has fallen 65%, 64%, and 84% on year in the previous three quarters. It incurred a one-time expense of INR 1.03 billion due to the forfeiture of a security bid. During the quarter, the Ministry of Coal terminated the Banai and Bhalumuda coal block after the company decided not to develop it. Analysts expected the company to report a consolidated net profit of INR 6.59 billion.   

 

Revenue growth for the flagship company of the JSW group was far slower than growth in sales volume. While the company posted a 12% on-year and 10% sequential growth in its sales volume, its consolidated revenue fell 1% on year and rose just 4% sequentially to INR 413.78 billion. Analysts expected the company to post consolidated revenue of INR 405.74 billion. Sequentially, JSW Steel's consolidated net profit rose 63% due to lower coking coal prices.

 

The company sold 6.71 million tonnes of steel in the December quarter, of which 6.54 million tonnes was from its Indian operations. However, a 10% on-year fall in net sales realisations at the company's Indian operations offset the growth in volumes. The company's volume for the December quarter grew faster than the overall steel consumption in India. Steel consumption grew 6.8% in India during the quarter, JSW Steel said in a release. 

 

However, the company sold less steel than it produced in the December quarter. In an update earlier this month, the company said total production in the December quarter rose 2% on year to an all-time high of 7.03 million tonnes. The company produced 6.82 million tonnes of steel in India during the quarter, up 3% on year. The average capacity utilisation at the company's Indian operations was 91% in the December quarter.    

 

The positive impact of lower coking coal prices was offset by a higher effective tax rate of 39% due to losses at the company's overseas subsidiaries, according to the company's investor presentation. However, the company's tax expense of INR 4.59 billion for the December quarter was almost half the tax expense in the year-ago quarter. 

 

The company said a better product mix resulted in a 12% on-year increase in sales volume of value-added special products. The share of value-added products in the total sales volume, however, remained the same at 60%, according to the investor presentation. Exports constituted 8% of sales from the Indian operations for the December quarter, up from 7% in the previous quarter. 

 

JSW Steel's consolidated operating earnings before interest, tax, depreciation, and amortisation for the December quarter was INR 55.79 billion, up 3% sequentially, but down 22% from the year-ago quarter. For the Indian operations, the company reported a 20% on-year fall in operating EBITDA to INR 55.64 billion. The company's consolidated operating EBITDA margin was 13.48% during the quarter, down from 17.12% a year ago. The company recorded lower EBITDA per tonne compared to the previous quarter. At Indian operations, EBITDA per tonne fell to INR 8,516 from INR 9,266 in the previous quarter.  

 

Apart from domestic factors, profitability was hit due to an EBITDA loss of $17.86 million from the company's overall US operations compared with a positive figure of $12.23 million a year ago. The Ohio unit in the US recorded an operating loss of $15.58 million in the December quarter, compared with a loss of $6.44 million a year ago. The company said its US operations' EBITDA fell sequentially and on year due to a decline in steel prices. 

 

JSW Steel's consolidated net debt fell to INR 809.21 billion as on Dec. 31, down by INR 18.84 billion from the previous quarter. So far this financial year, the company has spent INR 109.37 billion as capital expenditure, of which INR 30.87 billion was spent in the December quarter. The company had earlier guided for a capital expenditure of INR 160 billion to INR 170 billion for FY25. 

 

One of the two casters and converters at the company's steel melting shop unit started operations during the December quarter. The second caster started in January, the company said. "We expect ramp-up of the expansion project during Q4 FY25," JSW Steel said in a press release. The Odisha-based 30 million tonnes per annum slurry pipeline is expected to be commissioned in 2026-27 (Apr-Mar), the release said.

 

For nine months ended December, the company reported a consolidated net profit of INR 20.01 billion, down from INR 75.13 billion a year ago. The company's consolidated revenue fell to INR 1.24 trillion during the same period from INR 1.29 trillion a year ago. Friday, shares of JSW Steel closed at INR 932.45 on the National Stock Exchange, up 0.3%.  End

 

US$1 = INR 86.20

 

Edited by Deepshikha Bhardwaj

 

 

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