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JSW Steel Q1 Result | Consolidated profit slumps 86% YoY to Rs 838 crore, revenue up 32%

During the quarter, high inflation across major economies on the back of supply chain disruptions and the Russia-Ukraine conflict impacted the global economic outlook

July 22, 2022 / 05:58 PM IST
JSW Steel

JSW Steel

 
 
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JSW Steel Limited on July 22 reported an 85.8 percent year-on-year decline in consolidated net profit at Rs 838 crore for the quarter ended June 30, 2022. The company had reported a consolidated net profit of Rs 5,904 crore in the year-ago period.

Sequentially, the profit was 74 percent down from Rs 3,234. After adjusting exceptional expense of Rs 741 crore, the consolidated profit for the last quarter of FY22 stood at Rs 3,975 crore.

Consolidated revenue climbed 31.8 percent year-on-year to Rs 38,086 crore as compared to net revenue of Rs 28,902 crore.

On a sequential basis, the revenue declined  18.8 percent from the net revenue of Rs 46,895 crore recorded in the previous quarter, which was also the highest revenue generation by the company in a quarter.

“During the reported quarter, high inflation across major economies on the back of supply chain disruptions and the Russia-Ukraine conflict had impacted the global economic outlook," the company said in its earnings release. “High inflation and policy rate tightening across the world have become formidable headwinds”.

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The company said the domestic steel industry was affected by falling global prices and the imposition of a 15 percent duty on certain steel exports in May further exacerbated the situation with a steep fall of 26 percent in exports QoQ.

Operational performance

The consolidated India operations of the company produced 5.72 MT (million tons) of steel during the quarter but sales volume stood at 4.45 MT. The company’s American subsidiary, JSW Steel USA, produced 0.16 MT of steel during the quarter and managed to sell its entire production.

Margins

The rise in the cost of raw materials, power and fuel costs and other expenses severely dented the margins .

The company could achieve an EBITDA (earnings before interest, tax, depreciation and amortization) of Rs 4,309 crore, which was down 58 percent from Rs 10,274 crore in the year-ago period. On a sequential basis, the EBITDA declined 53 percent.

Consequently, EBITDA margins for the quarter at 11 percent were 25 percent lower than the 36 percent recorded in year-ago quarter and 9 percent down from the March quarter.

The net margins for the June quarter stood at 2.2 percent compared to 20.4 percent during the same period last year and 7.1 percent during the March quarter.

Debt

The company's consolidated net gearing (net debt to equity) stood at 0.98x at the end of the quarter (as against 0.83x at the end of Q4 FY22), and net debt to EBITDA stood at 2.03x (as against 1.4Sx at the end of Q4 FY22). A significant portion of the increase in debt due to the locking up of working capital in inventory.

Capex

The capex spend during the quarter stood at Rs 3,702 crore against the planned capex spend of Rs 20,000 crore for FY23. “Considering the current market conditions, the company expects to calibrate its capex spend to Rs 15,000 crores for FY23," it said.

Its expansion projects are going as planned. Its brownfield expansion at Vijayanagar is expected to be completed by the end of FY24, while the downstream projects in Vasind and Tarapur would be done by Q2FY23.

Shares of JSW Steel closed Rs 5.1 lower at Rs 582.45 on July 22 on the NSE. The stock has generated negative returns of 18.7 percent over the past year and is trading 5.8 percent higher over the past month.

 
Gaurav Sharma
first published: Jul 22, 2022 04:04 pm
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