BackJSW Steel net loss at `115.55 crore
Sales rose 35% to `12,796.26 crore from a year ago
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Mumbai: JSW Steel Ltd, India’s second largest domestic steel maker by capacity, unexpectedly reported a consolidated net loss of ₹ 115.55 crore in the September quarter from a net profit of ₹ 691.25 crore in the year-earlier period, citing losses on account of the falling rupee and incorporation with the financials of its units.
Consolidated net sales rose 35% to ₹ 12,796.26 crore from a year ago, the company said on Tuesday. A survey of 24 analysts by Bloomberg expected JSW Steel to report a profit of ₹ 325.8 crore for the second quarter and net sales of ₹ 11,086.9 crore.
“This is because of large translational losses, but this has come down from the previous quarter," Seshagiri Rao, joint managing director and group chief financial officer of JSW Steel, said at a media briefing. “This was because of the falling rupee."
The consolidated results also took into account the financials of subsidiaries, joint ventures and associates.
On a stand-alone basis, JSW had a net profit of ₹ 101.25 crore, down 88% from ₹ 822.26 crore in the same quarter a year ago.
The company did not provide more details on the losses, but an analyst said these are mark-to-market losses, primarily on account of coking coal imports where the company has quarterly contracts.
“This loss can be offset by likely higher revenue in Q3 as the company has adopted a 100% hedging policy on its forex exposure both for import and export," said Goutam Chakraborty, research analyst at Emkay Global, a brokerage.
Concerns are centred around price realizations, Chakraborty added, citing net realization of ₹ 37,487 per tonne in the second quarter, down from ₹ 37,558 a tonne in the first quarter. “This could indicate that their price hike in September could not be passed on or that they exported more volumes at lower price," he said.
July to September is traditionally the slowest season for the steel industry as construction activity takes a back seat because of the monsoon. However, steel companies, including JSW, raised prices in the quarter anticipating good festival demand for automobiles, consumer goods and construction in the third quarter.
Prices are likely to stay stable, but an upward thrust is expected as January marks the start of the construction season and also being the election year, there could be more infrastructure development, said Jayant Acharya, director, commercial and marketing.
Rao said the company is on track to produce 12 million tonnes (mt) of steel in 2013-14 as guided earlier and that its focus on exports will stay. In the quarter under review, the company had the highest ever quarterly crude steel production of 2.98 mt and highest ever quarterly sales at 3.13 mt.
Rao said the company’s net debt now stands at ₹ 30,425 crore, 39% of which is in foreign currency.
JSW Steel ended at ₹ 861 on the BSE on Tuesday, up 0.19%, while the benchmark Sensex rose 1.74%. JSW Steel has gained 16.82% in 2013 while the Sensex has expanded 12.31%.
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