New Delhi: JSW Steel Ltd, led by Sajjan Jindal, reported a 63.85% year-on-year decline in its consolidated net profit for the April-June quarter (Q1FY25) to ₹845 crore. The drop was primarily attributed to one-time inventory valuation charges and weaker realizations in export markets.
Consolidated revenue from operations saw a meagre 1.72% year-on-year (YoY) rise to ₹42,943 crore in the three months to June. A Bloomberg poll of analysts had projected JSW Steel to post a profit of ₹1,280 crore for the quarter under review on revenue of ₹42,334 crore.
One-time inventory valuation charges added ₹1,000 crore to expenses during Q1FY25, compared to a ₹2,195 crore reduction in expenses in Q1FY24.
Sales and utilization
The company reported steel sales of 6.12 million tonnes (mt), marking a 7% YoY rise, with domestic sales contributing 5.31 mt, up 14% on year. However, exports fell 29% YoY, contributing only 10% of sales from Indian operations in Q1FY25, down from 15% in the year-ago period.
Capacity utilization at the company’s Indian operations stood at 87% for the quarter, impacted by planned maintenance shutdowns at the Dolvi facility and BPSL.
The company’s consolidated operating Ebitda, or earnings before interest, tax, depreciation, and amortization, dropped 10% sequentially during the June quarter to ₹5,510 crore, driven by lower sales volumes and certain one-off items. The operating margin for the quarter stood at 12.8%.
International performance and debt
The company’s Ohio subsidiary reported an Ebitda loss of $15.61 million for the fiscal first quarter, while its US plate-and-pipe mill unit recorded an Ebitda profit of $12.99 million. JSW Steel’s Italy operations also reported an operating profit of 7.67 million euros.
Net debt in the three months to June increased ₹6,283 crore to ₹80,199 crore, attributed to capital expenditure on ongoing expansion projects and investment in working capital. The company plans to spend ₹20,000 crore in capex for FY25.
Challenges and outlook
A significant concern for JSW Steel is the rising level of steel imports into India, making the country a net importer of the alloy.
“During Q1FY25, India’s finished steel consumption grew 14.9% YoY…However, India remained a net steel importer during the quarter with elevated imports similar to FY24, especially from China and FTA; this remains a challenge for the domestic steel industry,” the company said.
Indian steel exports fell 35.8% YoY in Q1FY25 to 1.49 mt.
But in a positive, the company expects Chinese exports to stay steady in the near term, driven by soft domestic demand. Meanwhile, a favourable monsoon in India is expected to support the ongoing recovery in rural demand, contributing to the country’s growth momentum driven by manufacturing, infrastructure development, and optimistic consumer sentiment.
JSW Steel also announced a related party transaction amounting to ₹1,700 crore for the transfer of a slurry pipeline project to JSW Infrastructure Ltd, a group entity.
“The board of directors at its meeting held today has approved the transfer of the slurry pipeline undertaking pertaining to the under-construction 30 MTPA slurry pipeline in Odisha…by way of a slump sale to JSW Infra,” the company said in a statement.
JSW Steel will enter into a long-term “take or pay” agreement with JSW Infra for the transportation of iron ore slurry for 20 years. The total planned capex of this undertaking was estimated at ₹3,400 crore, which JSW Infra will now incur. The project’s commissioning is expected in FY27.