JSW Steel Q1 Results: Profit Slumps 86% As Costs Surge, Prices Fall

Cost of materials, and power and fuel expenses more than doubled in the first quarter for JSW Steel.

<div class="paragraphs"></div><div class="paragraphs"><p>(<a href="">Karan Bhatia</a>/Unsplash)</p></div>
(Karan Bhatia/Unsplash)

JSW Steel's Ltd.'s first-quarter profit slumped as prices fell, costs surged and exports dropped after India imposed a levy.

The steelmaker's net profit tumbled 86% over a year earlier to Rs 838 crore in the first quarter ended June, according to its exchange filing. That compares with Bloomberg's consensus estimate of Rs 1,279.3 crore.

Its total costs surged 78% in the quarter from April to June from a year earlier. Cost of materials, and power and fuel expenses more than doubled in the first quarter.

Other Highlights (YoY)

  • Revenue up 32% at Rs 38,086 crore.

  • Ebitda fell 58% at Rs 4,309 crore.

  • Ebitda margin at 11.3% against 35.5%.

The domestic steel industry was impacted by falling global prices and the imposition of a 15% duty on certain steel exports in May 2022 further exacerbated the situation with a 26% sequential fall in exports, the company said in a statement.

"The export duty on steel products is expected to be a temporary measure to contain inflation and may be removed once inflation cools down," it said. "Inherent demand from auto and construction & infrastructure segments remains strong that should support overall steel consumption during FY23."

The company has also cut down on its capex spends for FY23 from a previously planned Rs 20,000 crore.

Its total crude steel production, including its U.S. operations for the quarter, stood at 5.88 million tonnes.

"Considering the current market conditions, the company expects to calibrate its capex spend to Rs 15,000 crore for FY23," it said.

Shares of JSW Steel ended 0.87% lower before the results were announced compared with a 0.69% rise in the benchmark Nifty 50.