JSW Steel posts ₹2,773 cr profit in Q2, revenue up 7%

JSW Steel, India's largest steelmaker, clocked a net profit of ₹2,773 crore in the quarter ended September against a loss of ₹915 crore in the corresponding period a year ago.

Revenue from operations rose nearly 7% year-on-year to ₹44,584 crore during the second quarter compared with ₹41,778 crore in the year-ago quarter.

Operating EBITDA stood at ₹7,886 crore, up 12% quarter-on-quarter driven by higher sales volumes and lower coking coal costs. EBITDA margin came in at 17.7%. The overall EBITDA was partially offset by lower EBITDA contribution from the overseas operations.

The company's net debt increased to ₹69,195 crore during the quarter, primarily due to additions of borrowings arising out of the merger of JSW Ispat Special Products Limited (JISPL).

Steel production and consumption remain strong, aided by government capex as well as an overall healthy economy, the steelmaker says in a statement. India's finished steel consumption during Q2 FY24 was 32.8 million tonnes, up 16.1% year-on-year while crude steel production grew 15.9% to 34.81 million tonnes.

Consolidated crude steel production for the quarter stood at 6.34 million tonnes, up 12% year-on-year. The company took certain maintenance shutdowns at Indian operations during the quarter, bringing down the average capacity utilisation to 89%. "Capacity utilisation was lower at the Ohio, U.S. operations due to adverse market conditions," it says.

Steel sales for the quarter stood at 6.34 million tonnes, an increase of 10% year-on-year. Domestic sales at 5.49 million tonnes were up 8% driven by strong domestic demand and improvement in product mix. Exports, at 0.69 million tonnes, constituted 11% of sales from the Indian operations.

In its outlook, JSW Steel says there has been a slowdown in the global economy compared to 2022 due to the lingering impact of the Ukraine conflict as well as unprecedented monetary tightening to combat inflation.

“While there are several downside risks to global growth, the odds of a hard landing have receded. Evolving geopolitics remains a key concern,” says the steelmaker.

“In India, economic activity remains resilient despite global headwinds. Monthly PMI data indicates strong traction in both manufacturing and services sectors. Government’s focus on infrastructure and positive sentiment are driving investments. Electricity consumption, e-way bills, rail and port traffic, domestic air passenger traffic, passenger vehicle sales and bank credit growth indicates strong underlying momentum in the Indian economy,” it says.

“In the U.S., healthy services sector and strong labour markets are supporting economic growth. However, the Fed’s ‘higher for longer’ stance to control sticky inflation implies elevated rates are likely to sustain. This could result in a slowdown from the end of CY23. In Europe, growth has weakened on elevated interest rates and a global slowdown that has affected exports,” the company says, adding that moderating inflation and improvement in global demand will be triggers for recovery.