JSW Steel Q4 PAT halves to Rs 1,495 cr on higher expenses, lower margins

JSW Steel board has passed a resolution to raise long-term resources of Rs 14,000 crore | Photo: Kamlesh Pednekar
Sajjan Jindal-led JSW Steel on Friday reported a net profit of Rs 1,495 crore in the March quarter of the financial year 2018-19 (Q4FY19), down 48 per cent from the year-ago period, on the back of increased expenses and lower realisations.

The company’s top line stood at Rs 22,368 crore in the period under review, up 4.8 per cent from the corresponding period last year, as sales volumes rose amid pressured prices on the back of not-so-strong demand.

According to Bloomberg estimates, the Mumbai-based steel producer’s bottom line was expected to be at Rs 1,486 crore, while net sales were seen at Rs 21,508 crore in Q4FY19.

“With an improvement in international demand and pricing of steel during the quarter, the company shifted its focus to international markets in order to liquidate the accumulated stocks which were built at the end of the third quarter. As a result, exports during the quarter increased sharply and accounted for 22 per cent of total sales,” JSW Steel management said at the earnings conference on Friday.

The board also passed a resolution for raising long-term resources of up to Rs 14,000 crore. The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) fell 16.1 per cent to Rs 4,440 crore on a year-on-year basis and margin contracted to 19.8 per cent, against 25.4 per cent in the corresponding period last year.

A sharp increase in expenses led to the significant drop in margins. Total expenses of the company grew by 13 per cent in the March quarter over same period last year, as high power and fuel cost along with change in inventories of finished goods, work-in-progress and stock-in-trade, which rose to Rs 1,694 crore in the quarter gone by from Rs 58 crore, ate into the margins.

Meanwhile, the company is implementing a cumulative capex spend of Rs 48,715 crore over FY18-FY21 and over next two years it aims to spend Rs 34,300 crore with some spill over to FY22. 

These projects are planned to be funded by a mix of debt and internal accruals. The balance has already been spent in the past two years.

With regard to the debt position, JSW Steel’s consolidated net debt as on March 31, 2019, stands at Rs 45,969 crore as against Rs 38,000 crore last financial year. Going ahead, the company has given a crude steel production guidance of 16.95 million tonne for FY20, up 1.5 per cent from last year and guidance of 16 million tonne saleable steel, again up 1.5 per cent from the previous year.

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