JSW Steel Net Down 59% In Q4FY13

JSW Steel, India's top steel company has reported a 2.3% decline in the gross sales (including excise duty) to Rs 10675 crore. Its net profit, however, declined by 59% to Rs 328 crore due to lower realisations, higher depreciation and finance cost. The company, however, has said that it will clock 9% growth in steel production and 10% growth in saleable steel in FY14.

For the said period, the company’s crude steel production was up 2% at 2.11 million tonnes (MT) on a YoY basis. Sales of flat products were up 9% to 1.91 MT, while those of long products went up 6% to 0.5 MT. The total saleable steel volumes were up 5% at 2.43 MT.

During the quarter, the company has reported a 43% rise in exports and an 11% decline in domestic sales. It has stated that the environment in the domestic market remains challenging, with lower demand and growing imports from Free Trade Agreement (FTA) countries like China. The average realisations per tonne at the EBITDA level have declined by 12.7%.

JSW Steel has reported an 80 basis points rise in its standalone EBITDA margins following measures such as the use of low grade iron ore, improvement in logistics, blending of fuel and enhanced utilisation. Its consolidated EBITDA margins, however, have shown a drop of 103 basis points to 16.24%.

The depreciation rose by 12% to Rs 594 crore as the company expanded its capacity by 3 MTPA. This capacity, however, has not been commissioned due to the unavailability of iron ore. Finance costs for the quarter rose by 11.5% to Rs 507 crore. The company has a total debt of Rs 19533 crore, with a net debt-to-equity ratio of 1.1x. Taxes during the quarter were higher on account of an increase in the tax surcharge from 5% to 10% as declared in the Union Budget for FY14.

As for its yearly outlook, the company has said that the recovery in the global economy is uncertain at this point. Even for the domestic market, it has maintained a cautious approach due to the threat of imports from China. The iron ore availability is expected to rise in this fiscal, bringing higher productivity, fuel efficiency and cost efficiency to the company. For FY14, JSW Steel expects 9% growth in steel production to 9.25 MT and 10% growth in saleable steel sales to 9.75 MT.