JSW Steel Limited on October 21 reported a consolidated loss of Rs 915 crore for the quarter ended September, 2022, compared to a consolidated net profit of Rs 7,179 crore in the year-ago period. During the previous quarter, the steelmaker had earned a profit of Rs 839 crore.
The performance for the quarter got impacted due to the sharp decline in steel prices in the domestic market, driven by the meltdown in global commodity prices. The decline in realizations negated the impact of lower iron ore prices while higher power and fuel costs further impacted the profitability for the quarter.
Consolidated revenue climbed 29 percent year-on-year to Rs 41,778 crore as compared to a net revenue of Rs 32,503 crore registered during the corresponding quarter of the last year. On a sequential basis, the revenue was up 10 percent from Rs 38,086 crore recorded in the previous quarter.
Volumes
The consolidated production during the quarter stood at 5.68 million tonnes (MT) while the company sold 5.77 MT of steel during the quarter, which was a growth of 28 percent on quarter. This growth in sales volume was driven by higher domestic sales as domestic consumption during the quarter stood at 27.93 MT, up 13 percent on year and up 1.6 percent from the previous quarter. The domestic demand was supported by a strong automotive sector and demand from the infrastructure sector.
EBITDA
The operating earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter came in at 1,752 crore, down 98 percent YoY and down 59 percent as compared to the previous quarter.
The EBITDA margin for the quarter at 4.2 percent was down ~28 percent compared to the EBITDA margin of 32 percent achieved during the same period last year. Sequentially, the EBITA margin tanked 11.4 percent.
“The fall in EBITDA is attributable to a reduction in steel spread, as the decline in sales realization was only partly compensated by the reduction in coal and domestic iron ore prices”, the company said in its earnings release.
Subsidiary performance
JSW Steel Coated products produced 0.68 MT and sold 0.79 MT of steel products during the quarter, generating a revenue of Rs 6,723 crore and an EBITDA loss of Rs 79 crore. The subsidiary reported a loss of Rs 260 crore at the net level.
Bhushan Power and Steel Ltd, produced 0.63 MT of steel and sold 0.64 MT. Its revenue from operations for the quarter stood at Rs 4,805 crore on which it incurred an EBITDA loss of Rs 183 crore. It reported a net loss of Rs 340 crore. The performance of the subsidiary was impacted by the non-availability of iron ore due to heavy monsoon in Odisha.
Jindal Steel USA Ohio Inc produced 48,691 tonnes of hot rolled coils (HRC) and sold 52,862 tonnes. It also produced 90,709 tonnes of slabs during the quarter for which the sales volume stood at 63,614 tonnes. This subsidiary incurred a net loss of $40.25 million for the quarter.
US Plate and Pipe Mill incurred a net loss of $24.7 million while JSW Steel Italy reported an operating EBITDA of Euro 1 million for the quarter.
Debt and capex
Net debt for the company stood at Rs 65,719 crore at the end of the reported quarter, down Rs 1,502 crore over the previous quarter. The net gearing at the end of the quarter stood at 1.04x as against 0.98x at the end of quarter ended June 2022. Net debt to EBITDA at 2.7x was higher compared to 2.03x reported at the end of previous quarter.
The company incurred Rs 2,891 crore towards capex during the quarter, which took the total capex spend during the first half of current fiscal to Rs 6,593 crore. The company has earmarked an outlay of Rs 15,000 crore towards capex in FY23.
JSW Steel closed 1.37 percent lower at Rs 619.80 per share on the NSE. The stock is down 7.5 percent over the past one year and has lost close to 9 percent during the past one month.
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