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JSW Steel Q4 PAT up three-fold at Rs 1,009 cr on strong export growth

Revenues up 35% at Rs 17,917 cr, led by higher volumes, increase in value-added product sales

Aditi Divekar  |  Mumbai 

JSW Steel's Bellary plant in Karnataka
JSW Steel's Bellary plant in Karnataka

Sajjan Jindal-led reported a higher-than-expected consolidated net profit of Rs 1,009 crore in the March quarter (Q4), a three-fold jump from Rs 300 crore in the year-ago period.

Revenues stood at Rs 17,917 crore, up 35 per cent year-on-year, mainly led by higher volumes, increase in value-added product sales and a better geographical mix.

As per Bloomberg estimates, net profit was pegged at Rs 749 crore and revenues at Rs 16,300 crore.

"Our agility to adjust to market conditions coupled with a better geographical mix has helped push up exports 153 per cent (year-on-year for FY17) even in challenging business environment where global demand for steel has grown a meagre 1 per cent for FY17," Seshagiri Rao, group chief financial officer and managing director said today at the company's conference.

The company said it had posted the highest-ever revenue in Q4, which saw an operating EBITDA of Rs 3,165 crore, up 64 per cent year-on-year. EBITDA/tonne also rose to Rs 7,595 from Rs 5,893 in the corresponding period last year, but was slightly lower from Rs 7,711 in December 2016 quarter.

"The business has not just done well domestically but also our plates and pipes mill in the US saw a positive EBITDA after a gap of about two years," informed Rao. Though the US unit witnessed a profit in Q4, on annual it continued to report a loss. Due to its poor performance in the past, JSW took a non-cash write-down on the facility few quarters ago.

For FY17, also met its production and sales guidance of 15.75 million tonne and 14.75 million tonne, respectively. Production was up 26 per cent and sales by 22 per cent over FY16.

also announced a capex of Rs 26,800 crore spread over next three years; for which, it plans to raise about Rs 15,000 crore via debt and balance through internal accruals.

"Annually, we plan to spend about Rs 8,000 crore on our capex. For FY18, we will arrange Rs 3,000 crore via internal accruals and balance via debt," informed Rao.

The company's capex plan includes doubling of capacity at Dolvi to 10 million tonne (cost Rs 15,000 crore), followed by cold-rolled-mill expansion at Vijayanagar (will use hot-rolled produced by Dolvi). The third is capacity expansion at Vasind and Tarapur and the final is a new blast furnace at Vijaynagar (replacing existing high-cost blast furnace to make plant efficient). At Vijayanagar, the company has no plans to expand capacity beyond the existing 12 million tonne as it would not have sufficient iron ore supplies. will also be using its Dolvi produced hot-rolled for conversion at Uttam Galva's Khopoli plant and has worked out a three-year contract with the latter.

"The total capex allocation involves investment in value-added products, backward integration and reduction of cost. For mining assets too, we have set a capex of Rs 530 crore," said Rao.

The current capex plan is the first phase of expansion which will go on till 2020. As part of its second phase of expansion, JSW is looking to set up 10 million tonne plant each at Jharkhand and Odisha, and is currently engaged in acquiring of land.

As on March 31, consolidated net debt stood at Rs 41,549 crore with debt/equity at 1.85 (against 2.11x at end-December'16) and debt/EBITDA at 3.41 (4.05x at end- December'16).

"Though the capex will increase our debt levels going ahead, we will also be making repayments of the existing debt and hence the overall increase in debt is not expected to go up significantly," said Rao.

For FY18, has guided for production of 16.5 million tonne and sales of 15.5 million tonne.

"Domestic demand for steel is seen up at 5 per cent this year from about 2.6 per cent in FY17 mainly because of increased consumption from oil & gas sector, water pipe segment and auto sector which is already doing well," said Rao. For exports, JSW will continue to look at products and markets where Chinese presence in minimal so that it gives them the advantage to not just increase export volumes but also get $15-$20 premium to China products.

With regard to imports, the management said that though overall imports have come down, steel used in the oil & gas segment continues to come to the domestic market on the back of increased circumvention of the prevailing duties.

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JSW Steel Q4 PAT up three-fold at Rs 1,009 cr on strong export growth

Revenues up 35% at Rs 17,917 cr, led by higher volumes, increase in value-added product sales

Revenues up 35% at Rs 17,917 cr, led by higher volumes, increase in value-added product sales

Sajjan Jindal-led reported a higher-than-expected consolidated net profit of Rs 1,009 crore in the March quarter (Q4), a three-fold jump from Rs 300 crore in the year-ago period.

Revenues stood at Rs 17,917 crore, up 35 per cent year-on-year, mainly led by higher volumes, increase in value-added product sales and a better geographical mix.

As per Bloomberg estimates, net profit was pegged at Rs 749 crore and revenues at Rs 16,300 crore.

"Our agility to adjust to market conditions coupled with a better geographical mix has helped push up exports 153 per cent (year-on-year for FY17) even in challenging business environment where global demand for steel has grown a meagre 1 per cent for FY17," Seshagiri Rao, group chief financial officer and managing director said today at the company's conference.

The company said it had posted the highest-ever revenue in Q4, which saw an operating EBITDA of Rs 3,165 crore, up 64 per cent year-on-year. EBITDA/tonne also rose to Rs 7,595 from Rs 5,893 in the corresponding period last year, but was slightly lower from Rs 7,711 in December 2016 quarter.

"The business has not just done well domestically but also our plates and pipes mill in the US saw a positive EBITDA after a gap of about two years," informed Rao. Though the US unit witnessed a profit in Q4, on annual it continued to report a loss. Due to its poor performance in the past, JSW took a non-cash write-down on the facility few quarters ago.

For FY17, also met its production and sales guidance of 15.75 million tonne and 14.75 million tonne, respectively. Production was up 26 per cent and sales by 22 per cent over FY16.

also announced a capex of Rs 26,800 crore spread over next three years; for which, it plans to raise about Rs 15,000 crore via debt and balance through internal accruals.

"Annually, we plan to spend about Rs 8,000 crore on our capex. For FY18, we will arrange Rs 3,000 crore via internal accruals and balance via debt," informed Rao.

The company's capex plan includes doubling of capacity at Dolvi to 10 million tonne (cost Rs 15,000 crore), followed by cold-rolled-mill expansion at Vijayanagar (will use hot-rolled produced by Dolvi). The third is capacity expansion at Vasind and Tarapur and the final is a new blast furnace at Vijaynagar (replacing existing high-cost blast furnace to make plant efficient). At Vijayanagar, the company has no plans to expand capacity beyond the existing 12 million tonne as it would not have sufficient iron ore supplies. will also be using its Dolvi produced hot-rolled for conversion at Uttam Galva's Khopoli plant and has worked out a three-year contract with the latter.

"The total capex allocation involves investment in value-added products, backward integration and reduction of cost. For mining assets too, we have set a capex of Rs 530 crore," said Rao.

The current capex plan is the first phase of expansion which will go on till 2020. As part of its second phase of expansion, JSW is looking to set up 10 million tonne plant each at Jharkhand and Odisha, and is currently engaged in acquiring of land.

As on March 31, consolidated net debt stood at Rs 41,549 crore with debt/equity at 1.85 (against 2.11x at end-December'16) and debt/EBITDA at 3.41 (4.05x at end- December'16).

"Though the capex will increase our debt levels going ahead, we will also be making repayments of the existing debt and hence the overall increase in debt is not expected to go up significantly," said Rao.

For FY18, has guided for production of 16.5 million tonne and sales of 15.5 million tonne.

"Domestic demand for steel is seen up at 5 per cent this year from about 2.6 per cent in FY17 mainly because of increased consumption from oil & gas sector, water pipe segment and auto sector which is already doing well," said Rao. For exports, JSW will continue to look at products and markets where Chinese presence in minimal so that it gives them the advantage to not just increase export volumes but also get $15-$20 premium to China products.

With regard to imports, the management said that though overall imports have come down, steel used in the oil & gas segment continues to come to the domestic market on the back of increased circumvention of the prevailing duties.

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Business Standard
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JSW Steel Q4 PAT up three-fold at Rs 1,009 cr on strong export growth

Revenues up 35% at Rs 17,917 cr, led by higher volumes, increase in value-added product sales

Sajjan Jindal-led reported a higher-than-expected consolidated net profit of Rs 1,009 crore in the March quarter (Q4), a three-fold jump from Rs 300 crore in the year-ago period.

Revenues stood at Rs 17,917 crore, up 35 per cent year-on-year, mainly led by higher volumes, increase in value-added product sales and a better geographical mix.

As per Bloomberg estimates, net profit was pegged at Rs 749 crore and revenues at Rs 16,300 crore.

"Our agility to adjust to market conditions coupled with a better geographical mix has helped push up exports 153 per cent (year-on-year for FY17) even in challenging business environment where global demand for steel has grown a meagre 1 per cent for FY17," Seshagiri Rao, group chief financial officer and managing director said today at the company's conference.

The company said it had posted the highest-ever revenue in Q4, which saw an operating EBITDA of Rs 3,165 crore, up 64 per cent year-on-year. EBITDA/tonne also rose to Rs 7,595 from Rs 5,893 in the corresponding period last year, but was slightly lower from Rs 7,711 in December 2016 quarter.

"The business has not just done well domestically but also our plates and pipes mill in the US saw a positive EBITDA after a gap of about two years," informed Rao. Though the US unit witnessed a profit in Q4, on annual it continued to report a loss. Due to its poor performance in the past, JSW took a non-cash write-down on the facility few quarters ago.

For FY17, also met its production and sales guidance of 15.75 million tonne and 14.75 million tonne, respectively. Production was up 26 per cent and sales by 22 per cent over FY16.

also announced a capex of Rs 26,800 crore spread over next three years; for which, it plans to raise about Rs 15,000 crore via debt and balance through internal accruals.

"Annually, we plan to spend about Rs 8,000 crore on our capex. For FY18, we will arrange Rs 3,000 crore via internal accruals and balance via debt," informed Rao.

The company's capex plan includes doubling of capacity at Dolvi to 10 million tonne (cost Rs 15,000 crore), followed by cold-rolled-mill expansion at Vijayanagar (will use hot-rolled produced by Dolvi). The third is capacity expansion at Vasind and Tarapur and the final is a new blast furnace at Vijaynagar (replacing existing high-cost blast furnace to make plant efficient). At Vijayanagar, the company has no plans to expand capacity beyond the existing 12 million tonne as it would not have sufficient iron ore supplies. will also be using its Dolvi produced hot-rolled for conversion at Uttam Galva's Khopoli plant and has worked out a three-year contract with the latter.

"The total capex allocation involves investment in value-added products, backward integration and reduction of cost. For mining assets too, we have set a capex of Rs 530 crore," said Rao.

The current capex plan is the first phase of expansion which will go on till 2020. As part of its second phase of expansion, JSW is looking to set up 10 million tonne plant each at Jharkhand and Odisha, and is currently engaged in acquiring of land.

As on March 31, consolidated net debt stood at Rs 41,549 crore with debt/equity at 1.85 (against 2.11x at end-December'16) and debt/EBITDA at 3.41 (4.05x at end- December'16).

"Though the capex will increase our debt levels going ahead, we will also be making repayments of the existing debt and hence the overall increase in debt is not expected to go up significantly," said Rao.

For FY18, has guided for production of 16.5 million tonne and sales of 15.5 million tonne.

"Domestic demand for steel is seen up at 5 per cent this year from about 2.6 per cent in FY17 mainly because of increased consumption from oil & gas sector, water pipe segment and auto sector which is already doing well," said Rao. For exports, JSW will continue to look at products and markets where Chinese presence in minimal so that it gives them the advantage to not just increase export volumes but also get $15-$20 premium to China products.

With regard to imports, the management said that though overall imports have come down, steel used in the oil & gas segment continues to come to the domestic market on the back of increased circumvention of the prevailing duties.

image
Business Standard
177 22