JSW Steel Q3 earnings: Record sales but hit by steel dumping crisis

Mumbai: JSW Steel Ltd finds itself in an unusual position. Although the company has been setting quarterly production and sales records and scaling back spending, it is making less money than a year ago.

India’s largest steelmaker ran at 91% capacity utilization between October and December, producing 6.82 million tonnes of metal, 3% higher than the same period last year and 3% higher than the same period in the previous quarter.

JSW Steel’s domestic sales were its highest ever in a quarter, well below 6 million tonnes. Sales of value-added products added higher margins and grew a healthy 12%, thereby improving the overall sales mix.

Despite all these markers of health, the numbers tell a different story. JSW Steel reported consolidated revenue of 1% year-on-year. ₹41,378 crore in the December quarter.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 22% year over year ₹5,579 crore. The EBITDA margin narrowed the 360 ​​basis point range to 13.5%.

consolidated profit ₹719 million is less than one-third of a year ago.

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A sharp fall in steel prices could explain the situation. Steel industry executives blame rising prices in the domestic market for sales from countries such as China.

For example, the average price of steel’s benchmark hot rolled coil (HRC) fell by 15% ₹56,050 a ton in 2023-24 quarter ₹One ton in Q3FY25 was 47,708, according to market intelligence firm BigMint. Steel prices are at their lowest since November 2020.

An analyst who follows the company said he expected a larger fall in EBITDA for JSW Steel, given the realization for the steelmaker, but cheaper raw materials offset some of the impact of lower prices.

“The standalone performance was in line with our expectations. Although the average selling price (ASP) was a quarter lower at Rs 1,186/tonne, lower raw material costs led to lower EBITDA/tonne reduction.

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debt rising

JSW Steel reports a consolidated EBITDA ₹8,314 per tonne of steel it sold in the December quarter, 31% lower ₹11,967 per ton a year ago.

“Consolidated volumes and revenue were closely tied to our estimates for the current quarter. Improving volumes and various cost control initiatives undertaken by the company arrested the decline in EBITDA/tonne, which sequentially fell by approximately Rs 555/tonne,” Jhonsa said. Falling coal costs, better product mix and higher institutional and retail sales also helped temper the sequential decline in EBITDA, he said.

As of December 31, JSW Steel’s net debt was slightly over ₹80,921 million and ₹79,221 million a year ago. Net debt to EBITDA also took a huge hit, rising to 3.57 from 2.64 a year ago, primarily due to shrinking EBITDA.

JSW Steel shares ended Friday’s trading higher by 0.26% ₹932.25 per share. Sensex ended the session lower by 0.43%.

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