JSW Steel Q1 consolidated profit falls 86% to Rs 839 crore

The firm’s earnings fell below Bloomberg analysts’ consensus estimate of the company posting a net profit of Rs 1,279.3 crore for the quarter.

JSW Steel Q1 consolidated profit falls 86% to Rs 839 crore
For the quarter under review, JSW Steel’s total income rose to Rs 38,275 crore from Rs 29,100 crore recorded during the same period a year ago.

JSW Steel, the flagship company of the diversified JSW Group, has posted an 85.77% fall in consolidated net profit at `839 crore for the first quarter ended June, impacted by higher expense costs. In comparison, the company had posted a net profit of Rs 5,900 crore for the comparable quarter of last financial year. The firm’s earnings fell below Bloomberg analysts’ consensus estimate of the company posting a net profit of Rs 1,279.3 crore for the quarter.

For the quarter under review, JSW Steel’s total income rose to Rs 38,275 crore from Rs 29,100 crore recorded during the same period a year ago. The company’s expenses were higher at Rs 36,977 crore (from Rs 20,804 crore) and cost of materials rose to Rs 25,597 crore (Rs 10,831 crore), the company said in a regulatory update.

Due to the volatile market conditions, the company had advanced certain shutdowns that were scheduled during the year, which lowered the average capacity utilisation (excluding at Dolvi phase-II) to 93% in Q1. This is fall from 98% recorded during the sequential fourth quarter ended March, it said.

The domestic steel industry was impacted by falling global prices and the imposition of a 15% duty on certain steel exports in May, further exacerbated the situation with a steep fall in exports of 26% on a quarter-on-quarter basis. The export duty on steel products is expected to be a temporary measure to contain inflation and may be removed once inflation cools down, it said.

Inherent demand from auto and construction and infrastructure segments remains strong that should support overall steel consumption during FY23. India’s steel consumption during the quarter was 27.36 million tonne, down 5.6% on a q-o-q basis, while exports fell 26% to 2.88 million tonne due to the weaker global demand and imposition of export duty.

JSW Steel’s 5 MTPA brownfield expansion at Vijayanagar is “progressing well”, with civil works underway at the site. The project is expected to be completed by end of FY24. The remaining downstream projects at Vasind and Tarapur are expected to be completed in the second quarter of FY23. The expansion at Bhushan Power & Steel to 3.5 MTPA is expected to be completed during second quarter of FY23.

In Ql, the firm’s capex spend was at Rs 3,702 crore, against the planned capex spend of Rs 20,000 crore for FY23. Considering the current market conditions, the company said it expects to calibrate its capex spend to Rs 15,000 crore for FY23.

On the outlook, the company said despite weakening global macroeconomic trends, India remains relatively resilient so far and continues to be the fastest growing major economy in the world with manufacturing, consumption and services sectors showing healthy traction.

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