JSPL profit dips as sales fall, costs rise

Turnover for the fourth quarter also declined by 5% to Rs 5,103 cr from Rs 5,377 cr in the same quarter previous year

Jindal Steel and Power (JSPL) registered a 47 per cent year-on-year decline in consolidated profit after tax (PAT) at Rs 402 crore for the quarter ended March due to lower sales and higher costs.

Net sales fell nine per cent year-on-year to Rs 5,064 crore; this was nine per cent lower than the Bloomberg estimate of Rs 5,592 crore. Volumes of steel products fell 16 per cent to 766,000 tonnes, against 908,000 tonnes in the year-ago period.

The core business segments, iron & steel and power, remained weak. The company’s performance was much below Street expectations.

At Rs 1,314 crore, earnings before interest, tax, depreciation and amortisation fell 17 per cent year-on-year; also, these were significantly lower than the Bloomberg estimate of Rs 1,721 crore. For the March quarter, the impact of an increase in depreciation and interest was Rs 260 crore. All these factors took a toll on profit for the quarter.

At Rs 402 crore, net profit fell 47 per cent year-on-year; it was 37 per cent lower than the Bloomberg estimate of Rs 639 crore.

“Profit is down mainly because of higher depreciation and interest costs and a planned shutdown in our Raigarh plant,” said Managing Director and Chief Executive Officer Ravi Uppal. During the quarter, the shutdown at the plant (capacity of three million tonnes a year or mtpa) led to a production loss of Rs 550-600 crore.

On Tuesday, the JSPL stock fell seven per cent to close at Rs 253.2 on the BSE.

For 2013-14, turnover rose a per cent to Rs 20,004 crore, while PAT fell 34 per cent to Rs 1,910 crore. During the year, steel capacity rose from three mtpa to 7.5 mtpa.

JSPL completed the Angul phase-I steel project and the two-mtpa plant at Oman, which bodes well for steel volumes. Though steel demand is likely to remain soft in the near term, analysts feel the worst is over.