JSW Steel Ltd.’s second-quarter profit jumped beating estimates despite higher costs of inputs like iron ore, coking coal and power.
The steelmaker’s consolidated net profit rose 21.4% sequentially to Rs 7,170 crore in the three months ended September, according to its exchange filing. That compares with the Rs 5,744.2-crore consensus estimate of analysts tracked by Bloomberg.
The company saw a sharp jump in other income from Rs 946 crore in the second quarter compared to Rs 198 crore in the first quarter. That came amid fair valuation gains on re-measurement of the company's optionally fully convertible debentures in one of its joint ventures, it said in its notes to accounts.
Q2 Highlights (QoQ)
Consolidated revenue rose 12.5% to Rs 32,503 crore, against the Rs 32,108.6-crore forecast. That was led by improved product and market mix.
Operating profit rose 1.4% to Rs 10,417 crore, compared with a forecast of Rs 10,452 crore. That was driven by higher realisation, reliance on exports and stable volumes. Pricing power of the overseas subsidiary also aided the performance.
Ebitda margin contracted to 32% from 35.5%.
3.79 million tonnes of saleable steel was sold in the second quarter, a 5% rise over the preceding quarter.
Ebitda Performance Of Overseas Units
Ohio unit reported operating profit $48.3 million vs Ebitda profit of $19.03 million.
U.S. plate and pipe mill operating profit of $13.16 million vs $24.45 million.
Italy arm reported Ebitda profit at Euro 6.1 million vs EBITDA loss of Euro 4.76 million.
Other Highlights
Net debt-to-equity: 0.92x.
Net debt-to-Ebitda: 1: 1.58x.
Sales rose 4.8% quarter-on-quarter to 3.79 million tonnes.
Domestic sales up 4% sequentially as demand affected by monsoon; exports increased 22%.
Domestic automotive sales rose 9% over the preceding quarter.
Highlights Of Interaction With Seshagiri Rao, Joint Managing Director
See slowing demand from China but growth in rest of the world.
Signs of demand recovery in India, especially from construction and infrastructure sectors.
Exports to account for 10-25% of overall volumes for the financial year and moderate in the second half of the fiscal.
Other income of Rs 702 crore is one-time in nature.
See exceptionally severe cost inflationary pressures, especially in coking coal prices.
Additional cost pressure of $100 a tonne to be absorbed in Q3.
Ebitda to improve in Q3 due to cost-saving measures.
Iron ore prices are at discount to 10-15% from international prices.
Iron ore prices to further head lower due to reducing demand in China.
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