JSW Steel Q2 profit plunges 84% to Rs 117 cr on lower sales

Sajjan Jindal-led JSW Steel today said its net profit slipped by 84 per cent to Rs 116.95 crore in the July-September quarter due to a sharp fall in net sales as the key sector faces weak demand and cheap imports.
The leading alloy maker had clocked a net profit of Rs 748.76 crore in the year-ago period. Net sales fell by 21.5 per cent to Rs 10,742.73 crore in the second quarter ended September 30 from Rs 13,691.76 crore a year ago.
Total consolidated income fell by 22 per cent to Rs 10,906.90 crore in the July-September period from Rs 13,894.79 crore in the same quarter last year.

"The industry faces huge challenge and incurring losses due to international commodity distress. The domestic steel price remained under pressure due to falling demand and uncontrolled imports from China, Japan and Korea," JSW Steel Joint MD and Group CFO Seshagiri Rao told reporters here.
"Despite intensifying competition due to dumping of steel, the company's consolidated domestic sales volume grew 22 per cent YoY. The consolidated sales volume stood at 2.82 million tonnes (MT) as retail sales grew by 80 per cent YoY with widening retail penetration," Rao said.
On a quarter-on-quarter basis, JSW's performance was better. After registering a net loss of Rs 106.81 crore in the June quarter, the company posted a net profit of Rs 116.95 crore in the last quarter due to reduction in production cost and focus on value added products, Rao said.

During Q2, the firm reported a marginal fall in crude steel production at 3.25 MT compared with 3.30 MT a year-ago, while saleable steel sales volume rose by 4 per cent to 3.19 MT as against 3.07 MT during the same period.

Despite the poor market conditions, the company is going ahead with its expansion plans by adding 4 MT to take the total capacity to 18 MT.
"The company had planned to invest Rs 9,000 crore in two years period, of which it is investing Rs 5,200 crore towards capacity expansion this year. We are increasing capacity of our Vijaynagar plant (Karnataka) by 2 MT to 12 MT and adding 2 MT at Dolvi facility by end of this calendar year, taking the total capacity to 18 MT," Rao said.

On the steel scenario, he said consumption of locally produced steel was down by 2.3 per cent YoY in first half of 2015-16 as total steel imports were up by 42 per cent YoY. The finished steel exports dropped by 26 per cent YoY.
The dumping of steel in India has resulted in excess availability, which continues to dent market sentiments and remains a serious threat to the domestic industry, he said, adding the unabated imports continued despite imposition of provisional safeguard duty on some items in September.