(Photo: Reuters)
(Photo: Reuters)

JSW Steel Q3 profit falls 10% to 1,603 crore

  • The Sajjan Jindal-promoted company reported consolidated net profit of 1,603 crore
  • The company may miss its FY19 sales guidance of 16mt by 2-3%

JSW Steel Ltd on Wednesday reported 10% fall in the third quarter net profit, despite higher revenues, thanks to depreciation and higher interest expenses at two of its overseas subsidiaries.

The Sajjan Jindal-promoted company reported consolidated net profit of 1,603 crore, 10% below the 1,774 crore reported a year ago.

Revenue from operations rose 11% to 20,318 crore from 18,264 crore in Q3FY18, while operating Ebitda rose 17% to 4,501 crore. Operating margin during the quarter was 22.2%.

Steel sales fell 7% in volumes in the December quarter to 3.68 million tonnes (mt) primarily because of a 70% fall in exports. Because of poor global demand and weak international prices, exports contributed to only 10% of total sales in Q3. However, exports are expected to pick up in Q4, as global prices for steel improve and demand rebounds after the Chinese New Year.

The company may miss its FY19 sales guidance of 16mt by 2-3%, the management indicated, since the first three quarters fetched sales volumes of only 71.6% of the full-year target. The lost volumes may not be recouped in the fourth quarter, it added.

With unsold inventory built up to 300,000 tonnes, “we will focus in Q4 on trying to reduce inventory and achieving maximum possible sales," said Seshagiri Rao M.V.S., joint managing director and group chief financial officer, JSW Steel Ltd.

At the end of December 2018, the company’s net debt stood at 46,000 crore, up 1,200 crore from the preceding quarter. The debt to Ebitda ratio was 2.32.

JSW is leading the race to acquire Bhushan Power and Steel with a bid of 19,700 crore.

This story has been published from a wire agency feed without modifications to the text.

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