JSW Steel posts 13-fold rise in Q2 profit at Rs 726.46 crore on higher output

JSW Steel on Thursday reported a net profit of Rs 726.46 crore in the quarter ended September 30, a nearly 13-fold rise from Rs 56.26 crore posted in the same period last year owing to higher crude steel production and sales.

Revenue in the second quarter stood at Rs 14,421 crore, up from Rs 11,993 crore in the same quarter last year.

"The company has had the highest-ever quarterly crude steel production at 3.98 million tonne, by 22 % Y-o-Y. Saleable steel sales have also been good at 3.84 million tonne, up 20% from last year, for the quarter," JSW Steel Joint Managing Director and Group CFO Seshagiri Rao told reporters here.

The net sales realisation was up 1% Y-o-Y, but fell the preceding quarter by 4%, owing to overall cost reduction, he said.

Consolidated operating EBIDTA (earnings before interest, tax, depreciation and amortisation) for the quarter under review rose 65% Y-o-Y to Rs 2,959 crore.

Rao said exports were at 26% of the topline.

He stated the company is on target with the production guidance of 15.75 million tonne for the fiscal year.

The Sajjan Jindal-led company will start operating five iron ore mines with a total capacity of 111 million tonne over the next two years, he said. "Two of the five mines will become operational by March 2017 and the rest in 2018."

On price outlook, he said of late there has been a spurt in coal and iron ore rates globally. "It (the upward trend) is likely to temporarily keep steel prices elevated in the current quarter and (impact) could spill over to the subsequent quarter."

Rao appealed to the government to offer trade remedial measures to keep a check on imports.

JSW Steel's production ramp-up was faster than demand improvement. In the first half of FY2016-17, crude steel production increased by 7.5% Y-o-Y, whereas apparent finished steel consumption grew by 3.6% Y-o-Y.

At the same time, the steel imports have come down by only 35% against expectations of a 50% decline despite initiation of various trade remedial measures by the government. Therefore, progress on effective trade remedial measures is imperative for the health of the industry, he said.

"It is a concern that several products are being imported below the MIP (Minimum Import Price). A lot of these are items like tin plate which we are capable of producing at a low price in India," he said.