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JSW Steel, India's third largest steel producer, reported a higher-than-expected consolidated net profit of Rs 748 crore in September quarter mainly because of increased net sales that rose due to improved product mix and higher share of value added products.
The company had reported a loss of Rs 115 crore in the corresponding period last year.
Net sales of JSW Steel, however, were a tad lower than estimates and stood at Rs 13,691 crore in the period under review, up 7% from last year.
As per bloomberg estimates, the Mumbai-based company's bottomline was seen at Rs 702 crore in the period under review, while its net sales were expected to be at Rs 13,741 crore.
Both, in domestic as well as the international market, the company had refocussed on value added products which led to higher net sales, said the management in the post earnings conference call today.
"In the begining of the year, we had set the target of 33% contribution from value added products in total sales, but we have achieved this target in September quarter itself," joint managing director & group chief financial officer Seshagiri Rao said.
During the quarter, the company reported highest ever crude steel production of 3.30 million tonne while saleable steel sales volume stood at 3.07 million tonne, JSW said in a release.
However, the company's export turnover in the period under review slipped 15% from same period last year because of the appreciating trend in the rupee as it stood at Rs 2,086 crore.
During the quarter, the company had made a provision of Rs 168.32 crore towards carrying value of its investment in US Plate & Pipe mill and also made provision of Rs 21.20 crore towards cancellation of the allotment of coal blocks. Due to this, JSW reported an EBITDA/ tonne of Rs 6,000 per tonne else thiswould have been bigger, close to Rs 8,000 rupees per tonne, slightly less than Rs 8,500 per tonne reported in the preceeding quarter.
"Overall, the EBITDA grew due to increased contribution of value added products, lower coal prices and benefit derived from imported iron ore which help improve fuel efficiency," said Rao.
In the quarter gone by, the company imported 1.70 million tonne iron ore and going ahead plans to keep its imports between 800,000-900,000 tonne per tonne until March 2015.
"We have not set any target of imports of iron ore per month as this is our basic raw material and so we will import as and how necessary,"said Rao. Iron ore prices in the domestic market have risen by 40% since January and have declined to $80 per tonne from $130 per tonne in the international market, encouraging imports of the commodity, said the company.
On the debt front, as on Sep 30, the company's net debt stood at Rs 35,756 crore with the debt:equity at 1.56. "We are continuously making an effort to manage our debt levels,"Rao said.
On subsidiary performance, at its Chile iron ore mines, the company reported an EBITDA loss of $1.76 million for the quarter due to a drop in iron ore prices in seaborne markets. At the US plate and pipes mill, the capacity utilisation of the plates mill stood at 40% and 9% at pipes mill.
Going ahead, the company sees strong demand from domestic auto segment and sees overall steel demand rise 3-4% in Oct-Mar period compared with corresponding period last year.
