JSW Steel, the flagship company of the diversified JSW Group, has posted an 89.50% fall in consolidated net profit at Rs 474 crore for the third quarter ended December 2022, impacted mainly by subdued exports.
The steel manufacturer had posted a net profit of Rs 4,516 crore during the same quarter of the previous fiscal.
During the reporting quarter, the company’s revenue from operations rose 2.79% to Rs 39,134 crore from Rs 38,071 crore recorded in the same period of year-ago fiscal.
A consensus estimate of Bloomberg analysts was expecting the firm to post a net profit of Rs 1,104.70 crore (11 brokers) on revenues of Rs 3,9601.10 crore (12 brokers).
The net profit was mainly impacted by export duties on finished steel products imposed in May 2022, which led to subdued exports (a 62% fall year-on-year and a 31% fall quarter-on-quarter).
During the third quarter, exports from India stood at 1.14 million tonne, lower by 55.7% year-on-year and 19.2% quarter-on-quarter, the company said in a statement.
However, the removal of export duties in November should improve the competitiveness of the Indian steel industry in the global markets going forward, JSW Steel said in a statement.
During the quarter, the combined crude steel production of JSW Steel stood at 6.24 million tonne, a 10% rise from sequential second quarter, mainly due to the ramp-up at the Dolvi plant.
During the quarter, the Dolvi phase-II expansion achieved capacity utilisation of 85%, compared with 80% in Q2 of FY23.
The restarting of facilities at JSW Ispat Special Products after a maintenance shutdown that had started in second quarter and ongoing ramp-up of Bhushan Power & Steel Ltd (BPSL) to 3.5 MTPA from 2.75 MTPA also contributed to the higher production. The Phase-II expansion at BPSL to 5 MTPA from 3.5 MTPA remains on track for completion by FY24, it added.
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The 5 MTPA brownfield expansion at Vijayanagar is progressing well, with civil works underway at the site.
The project is expected to be completed by FY24-end. JSW Steel’s Q3 capex spend was at Rs 4,114 crore and that for the nine-months of FY23 was at Rs 10,707 crore. This was against the revised capex spend of Rs 15,000 crore for FY23.
Outlook
In India, the fundamental growth drivers remain robust and the government’s focus on infrastructure is expected to continue in the upcoming Budget. However, the global economic outlook remains uncertain on the back of policy tightening by central banks and the impact from the ongoing conflict in Ukraine.
While supply chains have improved and inflation across major global economies is cooling off, there is a risk of a mild recession during 2023 in the developed markets.
Reversal of zero-Covid strategy in China and expected reopening, and declining inflation globally, should provide tailwinds to global growth in the second half of CY 2023, it added.