JSW Steel’s Q4 profit slips 65% as input costs rise

JSW Steel Ltd on Friday reported a 64.54% fall in its consolidated net profit for the March quarter to ₹1,299 crore mainly due to higher coking coal prices.

The Sajjan Jindal-led company’s consolidated revenue from operations fell 1.5% year-on-year to ₹46,269 crore.

A Bloomberg poll of analysts had expected JSW Steel to post a profit of ₹1,661.35 crore for the March quarter on revenue of ₹44,676.34 crore.

The cost of raw materials consumed by the company rose to ₹24,541 crore in January-March against ₹23,905 crore in the same period of FY23. 

The company’s consolidated Ebitda, or earnings before interest, tax, depreciation, and amortisation, dropped sequentially during the fourth quarter to ₹6,124 crore, down 15% sequentially. Its operating margin stood at 13.2% during the quarter. 

The company's Ohio subsidiary reported an Ebitda loss of $5.2 million for the fourth quarter, while its US plate and pipe mill unit recorded an Ebitda profit of $23.7 million. The company’s Italy operations reported an Ebitda profit of €7.5 million.

JSW's concerns and outlook

Among key concerns, the company said, were the rising level of steel imports into India, making the country a net importer of the alloy.

“During Q4 FY24, India’s finished steel consumption grew 9% YoY... That said, India was a net steel importer during FY24 with elevated imports (up 37.4% YoY in FY24), especially from China; this remains a challenge for the domestic steel industry,” the company said in a statement.

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JSW Steel’s domestic sales during the quarter fell 2% sequentially stood and 5% year-on-year to 5.16 million tonne, with the capacity utilization at 93%. The company's exports stood at 1.32 million tonne, constituting 20% of sales from its Indian operations.

For FY25, the company has set a target of total crude steel production at 28.40 million tonne and sales of 27 million tonne.

“For 2025, growth is likely to remain stable ... Inflationary pressure is easing across major economies albeit with some speedbumps,” the company said.

“This will likely allow central banks to commence rate cuts in 2024, although the extent of cuts has been diluted compared to earlier forecasts. Geopolitical risks have risen, and need to be watched, especially for their impact on global trade and energy prices,” it  added.

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The company maintains a positive outlook for public and private housing and the auto sector with elevated consumer confidence, coupled with easing inflation. This it believes will help support the consumption growth. 

“A recovery in the rural economy is expected due to above-normal monsoons forecasted for 2024. India’s outperformance is expected to continue, with positive trends across key sectors and a resilient macroeconomic profile,” it noted.

Mozambique mine acquisition

On Friday, the company also announced the acquisition of Minas de Revuboe Limitada (MDR), a premium hard-coking coal mine project in the Moatize Basin of Tete Province in Mozambique, to ensure captive sourcing. The financial details of the acquisition were not disclosed.

“It is one of the largest pre-development stage premium hard coking coal projects globally and has JORC reserves over 800 million tonnes,” it said in a statement.

JSW Steel, which has been on a spending spree recently, has announced major expansion plans to augment its capacity to 50 million tonne per annum by FY30.

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