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JSW Steel Ltd - Q3FY11 Result Highlights

JSW Steel Ltd’s (JSW) Q3FY11 consolidated results came below expectation on the back of lower than expected realisation as well as the higher feed prices for steel.

 
 
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PRLog - Feb. 2, 2011 - JSW Steel Ltd’s (JSW) Q3FY11 consolidated results came below expectation on the back of lower than expected realisation as well as the higher feed prices for steel. Though the company has reported highest ever quarterly volume and sales (Sales growth of 24.4% on YoY), profit margin of the company contracted 387bps from the corresponding quarter previous year.

During the quarter the company registered a volume growth of 11% with crude steel production of 1.636 mn MT compared to the 1.469 mn MT in Q3FY10. Total saleable steel stood at 1.593 mn MT in Q3FY11 against 1.425 mn MT in Q3FY10.

JSW’s continuous focus toward strategic product mix and sales through its retail chain JSW Shoppe has helped it fetch better realisation. The company has gradually reduced production of semis and is focusing on flat steel, where demand remains strong fetching better realisations compared to the long steel.

EBITDA margin during the quarter declined 544 bps compared to 16.9% compared to 22.4% in Q3FY10. On a YoY basis, blended EBITDA/ton declined 16% due to a sharp increase in input costs and offset the benefits of higher realisations and an improved product mix.

Steep fall in other income and higher depreciation charges during the quarter has impacted the bottom-line of the company. Net profit during the quarter declined 32% to INR 2917 mn compared to INR 4297 mn in Q3FY10, a 387 bps fall in the profit margin.

The company has repaid rupee term loan of INR 5050 mn which resulted in a reduction in the financial charges by 23.5%. The total debt for the company stood at INR 121.47 bn with a debt-equity of 0.74x compared to 0.8 x in the corresponding quarter previous year.

JSW’s US subsidiary saw a turnaround at the EBITDA level despite a decline in turnover by 21%. The EBITDA for the US arm stood at USD 1.67 mn compared to a loss of USD 8.4 mn in the corresponding quarter previous year. At the PAT level, it reported a net loss of USD 13 mn on account of higher interest costs on working capital loan. The management expects the US subsidiary to perform better in Q4FY11 as recovery in the US economy.

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