JSW Steel Limited (JSW Steel), on May 27, reported a 23 percent fall in consolidated net profit at Rs 3,234 crore for the fourth quarter of FY2021-22 as against Rs 4,198 crore recorded a year ago. On a sequential basis, the profit is lower by 25.6 percent from Rs 4,357 crore earned during the October–December period.
Consolidated revenues for one of the largest steel makers of the country rose 74 percent on-year to Rs 46,895 crore as compared to a net revenue of Rs 26,934 crore registered in the year-ago quarter. On a sequential basis, the revenue is higher by 23 percent from the net revenue of Rs 38,071 crore recorded in the previous quarter.
The surge in cost of raw materials, power & fuel, other expenses and inventory costs led to the fall in profits during the quarter despite a substantial improvement in revenues that was fuelled by better volumes and higher realisations.
For the full year period from April – March 2022, the consolidated PAT witnessed rose three fold to Rs 20,665 crore from the profit of Rs 7,911 crore achieved during FY21.
Consolidated revenues for FY22 jumped 83.3 percent to Rs 1,46,371 crore from the revenues of Rs 79,839 crore for the last year.
Volumes
The company achieved the highest ever consolidated crude steel production of 5.8 million tons (MT) during the quarter, registering an on year growth of 38 percent and a sequential growth of 11 percent. The production for standalone operations was 5.01 MT. The capacity utilization improved from 94 percent in the December ending quarter to 98 percent during the current quarter.
The sales volume during the quarter was also the highest ever for JSW Steel which sold 5.99 MT of steel on a consolidated basis with a year on year growth of 47 percent and 29 percent QoQ. The standalone sales volume during the quarter stood at 5.11 MT.
Sales of value added and special products (VASP) accounted for 60 percent of total sales volumes for the year. Branded products sales stood at 47 percent of total retail sales while exports accounted for 28 percent of total sales as the company exported 4.57 million tonnes of steel during the year, a growth of 8 percent on year.
“The domestic steel industry continued to see steady demand from the government's continued focus on public infrastructure”, the company said in its earnings release. “Investments in the construction and infrastructure sector continued to support steel consumption, hence, the steel industry witnessed an increase in finished steel consumption by 7.2 percent in Q4FY22 over the previous quarter”.
Margins
The operating EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter grew 9 percent on year and 1 percent sequentially to Rs 9,184 crore.
The inflation in India accelerated in line with global trends, exacerbated by the sharp rise in energy prices which severely dented the margins for the quarter. The other variable costs were also on a northward trajectory, further impacting the performance of the quarter.
The consolidated operating EBITDA margin for the quarter slumped by 11.76 percent to 19.58 percent, compared to 31.34 percent during the corresponding period of last year. Sequentially also, the EBITDA margins took a hit of 440 bps from 23.99 percent.
The net margin for the quarter stood at 7.13 percent, lower by 8.4 percent on year from 15.56 in the prior year period. Sequentially the net margins are down 4.73 percent.
Guidance for FY23
The company has given a guidance of 25 MT of crude steel production on a consolidated basis for FY23 and expect the sales volume of 24 MT.
Dividend
The company has recommended a dividend of Rs 17.35 per equity share of Re 1 each for the year ended 31 March 2022. The total outflow on account of equity dividend will be ~ Rs 4,194 crores, compared to Rs 1,571 crore paid for FY21.
JSW Steel ended Rs 3.30 lower at Rs 548.4 on May 27 at The National Stock Exchange. The stock has declined 19.6 percent over the past one year and is down 24 percent during the past one month.
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