JSW Steel, India’s largest steel maker by capacity, has reported an 85.4 per cent slump in net profit as surging imports to the domestic market drove prices down amidst muted demand because of weak post-election government spending.
On a consolidated basis, the net profit stood at ₹404 crore, compared with ₹2,773 crore in Q2FY24, while total revenue from operations slipped 11 per cent year-on-year (y-o-y) to ₹39,684 crore in Q2FY25 from ₹42,943 crore.
The flagship of the $24 billion JSW Group led by Sajjan Jindal also bore the impact of ₹342 crore as an exceptional item as provision for giving up an iron ore mine in Odisha and weak performance of the US operations.
While the business benefited from lower raw material prices, especially coking coal, during the three months ending September 30, the net sales realisation — a key barometer for market condition — dropped 7 per cent y-o-y and 5 per cent q-o-q.
Consolidated domestic sales dropped 4 per cent to 5.96 million tonnes in Q2FY25, mainly because of a weak export market which was flooded by cheap Chinese steel.Exports as a percentage of sales stood at 7 per cent during the last quarter, down from 11 per cent in Q2FY24.
The profitability at a consolidated level was also impacted by the weak US operations. The EAF-based steel mill at Ohio recorded a loss of $16.14 million, while the plate and pipe mill in Texas recorded a lower EBITDA of $5.04 million in the second quarter. The Italy operations ended the quarter with a positive EBITDA of €6.15 million.
A weak operating EBITDA of ₹5,437 crore in the last quarter compared with ₹7,886 crore in Q2FY24 translated to a higher debt gearing for JSW Steel.
Net debt as on September 30 stood at ₹85,098 crore compared with ₹80,199 crore as on June 30, leading to net debt to EBIDTA of 3.51x compared with 3x at the end of the first quarter.
The company cited capex on ongoing expansion projects, acquisition of an effective 20 per cent stake in a coking coal mine in Australia and an increase in working capital as the reasons for higher debt.
JSW Steel, however, said it expects capex in FY25 to be lower at ₹16,000-17,000 crore compared with ₹20,000 crore earlier projected after the transfer of a slurry pipeline project in Odisha to group company JSW Infrastructure and deferment of a blast furnace expansion by a year to FY26.
Commenting on the outlook for the second half, the company said that steel demand will remain healthy in H2FY25, driven by real estate, energy transition and pick-up in government spending.
The company board also announced two appointments. Arun Maheshwari came in as director-commercial, while steel sector veteran and former SAIL chairman Sushil Kumar Roongta joined as independent director on the board.
