JSW Steel records net loss of Rs 848 cr in Q2 FY23

The steel major reported a consolidated net loss of Rs 848 crore in Q2 FY23 as against a net profit of Rs 7,170 crore recorded in Q2 FY22.

Revenue from operations jumped 28.9% to Rs 41,122 crore in Q2 FY23 from Rs 31,909 crore posted in the corresponding quarter previous year.

The company reported a loss before exceptional items of Rs 1,444 crore in Q2 FY23 as against a profit before exceptional items of Rs 9,791 crore reported in Q2 FY22.

Total expenditure surged 78.7% year on year (YoY) to Rs 43,354 crore in quarter ended 30 September 2022. Cost of raw materials consumed was at Rs 23,757crore (up 92.69% YoY) and power and fuel stood at Rs 4,602 crore (up 94.92% YoY).

Operating EBITDA slumped 83.18% YoY to Rs 1,752 crore in Q2 FY23. Consolidated operating EBITDA margin stood at 4.2% in Q2 FY23. The fall in EBITDA is attributable to a reduction in the steel spread, as the decline in sales realization was only partly compensated by the reduction in coal and domestic iron ore prices.

Crude Steel Production was at 5.66 million tones in Q2 FY23. Saleable Steel sales for the quarter stood at 5.74 million tonnes, higher by 28% QoQ, driven by higher domestic sales.

The domestic steel industry witnessed demand growth with consumption at 27.93 million tonnes in Q2 FY23, up by 13% YoY and 1.6% QoQ, supported by a strong automotive sector and demand from the infrastructure sector. However, the imposition of export duty on finished steel products in May 2022 had made exports unattractive, with Q2 FY23 exports (excluding semis) from India at 1.41 million tonnes, lower by 66.4% YoY and 35.6% QoQ.

During the quarter, the combined crude steel production of JSW Steel was 5.68 million tonnes, sequentially lower by 3%, attributable mainly to extended maintenance shutdowns at JSW Ispat Special Products (JISPL), and subdued market conditions in USA. The 5 metric tonnes per annum (mtpa) Dolvi Phase-II expansion continued to ramp up and achieved average capacity utilization of approximately 80% vs. 60% in Q1 FY23.

JSW Steel said that its performance during the quarter was significantly impacted by a sharp fall in steel prices, while benefit of lower raw material prices will flow through with a lag. One-off items such as NRV (net realizable value) provisions and inventory losses, mark-to-market unrealized loss on outstanding foreign currency loans and payment of export duty on exports further impacted the operating performance. Despite a challenging global economic scenario, the firm expects healthy steel demand growth in India during H2 FY23 which along with flow through of lower raw material prices should aid company's performance in the coming quarters, it added.

The company's consolidated net gearing (net debt to equity) stood at 1.04x at the end of the quarter as against 0.98x at the end of Q1 FY23, and net debt to EBITDA stood at 2.70x as against 2.03x at the end of Q1 FY23. Net Debt as the of end of 30 September 2022 stood at Rs 65,719 crore, lower by Rs 1,502 crores over 30 June 2022.

The company's capex spend was Rs 2,891 crore during Q2 FY23, and Rs 6,593 crore during H1 FY23, against the revised planned capex spend of Rs 15,000 crore for FY23.

JSW Steel ls the flagship business of the diversified, JSW Group, is India's leading integrated steel company with a steel-making capacity of 28.5 MTPA in India and the USA (including capaclties under joint control).

Shares of JSW Steel declined 1.03% to settle at Rs 622 on Friday, 21 October 2022.

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