JSW Steel Q3 Results: Net Profit Jumps To Highest In At Least 10 Quarters
JSW Steel Ltd.’s net profit rose to the highest in at least 10 quarters as demand for automakers to infrastructure and construction projects returned, offsetting operational losses at overseas subsidiaries.
The steelmaker’s consolidated net profit increased to Rs 2,681 crore in the three months ended December 2020 from Rs 211 crore a year earlier, according to an exchange filing. That compares with the Rs 2,507-crore consensus estimate of analysts tracked by Bloomberg.
Its consolidated revenue rose 21.1% year-on-year to Rs 21,859 crore, against the Rs 18,055-crore forecast. The top line was aided by a favourable product mix and improved realisations.
Other Highlights (Year-On-Year)
- Operating profit jumped 2.5 times to Rs 5,946 crore, compared with the estimated Rs 5,371 crore.
- Ebitda margin expanded to 27.2% from 13.5%.
India’s steelmakers have emerged from the disruptions caused by the Covid-19 pandemic once the nation largely reopened its economy after the world’s biggest lockdown. JSW Steel’s crude steel production, according to a Jan. 7 filing, rose 6% sequentially and 2% over the year earlier to 4.08 million tonnes in the three months to December. Its average capacity utilisation improved to 91% from 86% in the preceding three months.
But all the overseas subsidiaries of JSW Steel posted an operating loss in the reported period.
- JSW Steel Italy’s Ebitda loss stood at 0.52 million euro against an operating loss of 9.95 million euro a year ago.
- JSW Steel Ohio’s Ebitda loss stood at $21.26 million compared with an operating loss of $25.19 million.
- JSW Steel USA suffered an Ebitda loss of $8.45 million against an operating loss of $12.6 million a year ago.
Shares of JSW Steel closed 3.97% lower before the results were announced, compared with a 1.5% drop in the benchmark Nifty 50 Index.
Highlights from interview with JSW Steel CEO Seshagiri Rao:
- Company to achieve 95% of production guidance of 15 million tonnes for FY21
- To achieve 100% of sales guidance of 14 million tonnes due to higher inventory for FY21.
- Exports to remain 10% of over sales in Q4.
- Iron ore prices to remain higher in absence of substantial production
- Overseas subsidiaries losses look larger due to one-time provisioning.
- Expect provisioning of $17 million for overseas subsidiaries in Q4.
- Overseas subsidiaries to turn operationally profitable in Q2 FY22.
- Indian steel prices still at a discount compared to international prices.