JSW Steel Q1 Net jumps to Rs 1,109 cr on cost cuts

Sajjan Jindal-led JSW Steel today reported a multi-fold jump in consolidated net profit at Rs 1,109 crore for the quarter ended on June 30, 2016 on the back of cost reduction.
The net profit for company stood at Rs 21.2 crore in year ago period.
"Cost reduction and volume growth were the drivers for the growth in the quarter. We have recorded highest ever quarterly crude steel production of 3.87 million tones (MT), up by 14 per cent YoY. Our saleable steel sales also jumped to 3.34 MT, up by 8 per cent YoY," JSW Steel Joint Managing Director and Group CFO Seshagiri Rao told reporters here.

Revenue rose 2.19 per cent to Rs 12,720 crore and net profit by 52-fold at Rs 1,109 crore in June quarter of FY17, surpassing analyst expectations.
Expenses were lower at Rs 9,666 crore in the first quarter than Rs 10,233 crore in the year-ago period.
Although, the domestic apparent demand growth was almost flattish at 0.4 per cent YoY, the company strategically re-focused on the exports sales during the quarter, which grew by 39 per cent YoY, cushioning the impact of flattish domestic sales.

There is pressure on prices as demand is not good, so there could be some price reductions in the current quarter, he said.

Rao said the company had no firm plans to raise funds. However, it aims to reduce interest cost of 7.3 per cent by 0.5 per cent.
Commenting on the outlook, Rao said, "Rising global steel prices in March and April drove a sharp increase in steel production in all major regions during 2QCY16, except Europe and South America.
"Global steel capacity utilisation in June 2016 jumped to 71.8 per cent. The global steel industry continues to face headwinds of weak demand and over capacity. Exports from steel surplus countries like China, Korea and Japan continue to increase. In the absence of effective tariff measures, South East Asia, Middle East, Africa and Europe continue to see surge in imports whereas the US is able to clampdown imports with imposition of trade remedial measures."

Rao said that in domestic market, the steel production ramp-up was ahead of expected demand pick-up - crude steel production increased by 4.8 per cent YoY in Q1 FY17, whereas apparent finished steel consumption grew by only 0.4 per cent due to sluggish demand conditions."
"Overall imports into India have fallen by only 1/3rd from pre-MIP level as against expectations of a 50 per cent drop. Therefore, widening of MIP scope, effective implementation, monitoring and extension of MIP provisions is imperative for the health of the steel industry," he said.
The company will be able to meet its guidance of 15.75 MTPA of crude steel production and 15 MTPA of sales in current fiscal, Rao added.