JSW Steel Q1 Results: Profit Rises On Higher Steel Prices

JSW Steel Ltd.’s quarterly profit rose, beating estimates, on higher prices of products like hot-rolled coil.

The steelmaker’s net profit increased 40.6% sequentially to Rs 5,904 crore in the three months ended June, according to its exchange filing. That compares with the Rs 4,850-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

• Consolidated revenue rose 7.3% to Rs 28,902 crore, against the Rs 28,492-crore forecast. The top line growth was led by higher steel prices and improved product and market mix.

• Operating profit increased 21.7% to Rs 10,274 crore, compared with a forecast of Rs 9,159 crore. Higher realisation from export and domestic markets and enriched product mix to an extent was partially offset by the increase in raw material prices.

• Ebitda margin expanded to 35.5% from 31.3%

Prices of hot-rolled coil rose more than 19% sequentially—or by around Rs 10,000 per tonne—during the quarter, according to Edelweiss Securities.

Ebitda Performance Of Overseas Units

• Ohio unit reported operating profit $19.03 million vs Ebitda loss of $24.2 million.

• U.S. plate and pipe mill operating profit of $24.45 million vs Ebitda loss of $6.60 million.

• Italy arm reported Ebitda loss at Euro 4.76 million vs Ebitda loss of Euro 2.52 million.

Key Takeaway From JSW Steel’s Interview...

• Maintains FY22 sales guidance; sees strong growth in the second half of the ongoing fiscal.

• U.S. entities are now profitable; Italian unit to achieve break-even in H2 FY22.

• Q2 should see margin hit given sharply higher coking coal and lower average selling price per tonne.

• Good pickup in domestic steel demand from festive season or quarter ending September.

• Demand from steel globally remains strong.

• Steel prices witnessed some correction in July, in line with Asian markets.

• Does not see further downside in steel prices; but expects cost escalation.