JSW Steel's Q1 net profit down on forex losses

Moneycontrol Bureau

Steel products manufacturer JSW Steel's consolidated net profit fell significantly to Rs 50 crore in the quarter ended June 2012 from Rs 485 crore in a year ago period. The company held forex losses of around Rs 592 crore responsible for a decline in profits. Consolidated net sales increased 33% to Rs 9,902 crore, YoY mainly due to higher volumes and better sales volumes. Analysts on an average had a forecast of Rs 517 crore for net profit and Rs 9,410 crore for net sales.
The company said its net total debt gearing stood at 0.75 as against 0.69, quarter-on-quarter and the weighted average interest cost of debt is at 8.12% versus 8.19%, QoQ. Post the result announcement, shares of the company were down 3.32% to Rs 646.96 On the outlook, the company said weakness in prices of major inputs like iron ore and coal coupled with supply side corrections in high cost regions will keep global steel prices range bound in coming months. It also said that the world’s crude steel production at 767 million tons during the first half of 2012 has marginally grown by about 1%,YoY due to the continuing recessionary trend in Europe and slowing economy in China. The base level demand of steel still remains positive. However, the growth is expected to be lower at about 3.3% in 2012, vis-à-vis earlier forecast of 3.9% owing to global economic slowdown.