JSW Steel has posted a surprise net loss of Rs 915 crore on a consolidated basis for the quarter ended September, impacted by a dip in steel prices, higher input costs and dearth of raw materials.
In comparison, the flagship company of the diversified JSW Group had recorded a net profit of Rs 7,179 crore for the same quarter of last financial year.
During the quarter under review, the steel manufacturer posted a 28.54% rise in consolidated revenue from operations at Rs 41,778 crore, compared with Rs 32,503 crore posted during the year-ago period.
A consensus estimate of Bloomberg analysts was expecting the firm to post a net profit of Rs 298.20 crore (10 brokerages) on revenues of Rs 36,992.90 crore (10 brokerages).
“In the last quarter, the prices of steel fell by Rs 10,000 per tonne, while input costs dipped only by Rs 5,200-5,100. Also, we used coal and iron ore inventory that were bought at higher prices, and some Indian subsidiaries — such as Bhushan Power & Steel — could not operate their plants properly due to lack of availability of iron ore in Odisha,” JSW Steel joint managing director and group CFO Seshagiri Rao MVS said.
“Some iron ore was spoiled due to the monsoons, while logistical constraints also had an impact during the quarter,” he added.
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The company’s operating Ebitda for the quarter fell to Rs 1,752 crore, from Rs 10,417 crore recorded during the comparable year-ago period.
Geopolitical tensions and the Russia-Ukraine conflict have led to elevated energy prices and shortages. Aggressive tightening by the US Federal Reserve is causing sharp depreciation of other currencies and creating financial market volatility and macro imbalances, the company said in a statement.
During the quarter, JSW Steel’s combined crude steel production stood at 5.68 million tonne, sequentially lower by 3%, due to extended maintenance shutdowns at JSW Ispat Special Products, and subdued market conditions in the US.
The 5-MTPA Dolvi Phase-II expansion continued to ramp up and achieved average capacity utilisation of about 80%, versus 60% recorded in Q1 of FY23.
On a consolidated basis, the company’s saleable steel sales for the quarter rose by 28% to 5.74 million tonne on a quarter-on-quarter basis, driven by higher domestic sales.
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In the quarter under review, the company’s capex spend stood at Rs 2,891 crore, while that for the first half of the year was Rs 6,593 crore. This spend is part of the revised capex of Rs 15,000 crore for FY23.
On the outlook, the company said despite a challenging global economic scenario, JSW Steel expects healthy steel demand growth in India during the second half of the current financial year.