•JSW Steel reports highest ever quarterly crude steel production and highest ever quarterly saleable steel sales.
Mumbai, October 27, 2016 (GPN) :JSW Steel Limited (“JSW Steel” or the “Company”) today reported its
results for the Second Quarter and the Half Year ended 30th Sep, 2016 (“2Q FY2017” or
the “Quarter” and “1H FY2017” or the “Half year”).
Key highlights of the quarter:
Highest ever quarterly Crude Steel production: 3.98 million tonnes, up by 22% YoY
Highest ever quarterly Saleable Steel sales: 3.84 million tonnes, up by 20% YoY
Total income from operations: `13,357 crores
Operating EBITDA: `2,718 crores
Total income from operations: `14,421 crores
Operating EBITDA: `2,959 crores
The current quarter was marked by ramping up and stabilization of the recently re-
commissioned Blast Furnaces at Vijayanagar and Dolvi. As a result, crude steel
production grew by 22%YoY to 3.98 million tonnes in 2Q FY2017. At the same time,
saleable steel sales volume increased by 20%YoY to 3.84 million tonnes as the
company increased exports in a seasonally slow period of demand in the domestic
markets (due to monsoon). Not only this, the Company focused its efforts towards
increasing value added & special products sales, which grew by 20%YoY, and branded
steel products’ sales also grew by 11%YoY in this period.
Total Saleable Steel 3.84 3.19 20% 7.17 6.29 14%
Transition to Ind-AS Reporting
The Company has adopted the Indian Accounting Standard (“Ind-AS”) with effect from
1st April 2016 and the financial results for the quarter ended 30th Sept 2016 have been
prepared in accordance with the recognition and measurement principles laid down in
the Ind-AS 34 Interim Financial Reporting (prescribed under section 133 of the Companies Act, 2013 read with relevant rules issued thereunder). The results for the
quarter & half year ended 30th Sept 2015, and year ended 31st March 2016 have been
restated to comply with Ind-AS to make them comparable.
Standalone Financial Performance:
JSW Steel recorded total income from operations for the quarter `13,357 crores. The
Operating EBITDA for the quarter stood at `2,718 crores, up by 58%YoY primarily driven
by higher volumes, lower input costs and better operating efficiencies, with an EBITDA
margin of 22.2%. The net profit after tax stood at `672 crores for the quarter.
Gearing (Net Debt to Equity) at the end of the quarter stood at 1.75x (as against 1.85x
at the end of 1Q FY2017) and Net Debt to EBITDA stood at 4.41x (as against 5.13x at
the end of 1Q FY2017).
JSW Steel Coated Products:
During the quarter, JSW Steel Coated Products registered a production
(Galvanised/Galvalume products) volume of 0.45 Million Tons and sales volume of 0.44
million tonnes. Total income from operations and Operating EBITDA for the quarter
stood at `2,389 crores and `167 crores, respectively. Net Profit after Tax was `79 crores
for the quarter.
US Plate and Pipe Mill:
The US based Plate and Pipe Mill facility produced 48,787 net tonnes of Plates and
12,249 net tonnes of Pipes, reporting a capacity utilization of 20% and 9%,
respectively, during the quarter. Sales volumes for the quarter stood at 30,925 net
tonnes of Plates and 12,564 net tonnes of Pipes. It reported an EBITDA of $0.22 million
for the quarter.
JSW Industrial Gases Private Limited (JIGPL):
In August, 2016, JSW Steel acquired the entire shareholding of 74% of Praxair India
Private Limited in JSW Praxair Oxygen Private Limited (JPOPL) for a cash consideration
of `240 crores pursuant to an approval by its Board of Directors. As a result, JPOPL has
now become a wholly owned subsidiary of the Company. The name of this entity has
been changed to JSW Industrial Gases Private Limited (JIGPL) with effect from 30th
September 2016. The company sources Oxygen, Nitrogen and Argon gases from JIGPL
for its Vijayanagar Plant.
The Company has consolidated JIGPL as an associate (under equity method of
accounting) up to 15th August 2016 and as its subsidiary w.e.f. 16th August 2016 in the
Consolidated Financial Statements.
Consolidated Financial Performance
JSW Steel recorded Total income from operations `14,421 crores for the quarter.
Consolidated Operating EBITDA for the quarter surged by 65% YoY to `2,959 crores.
The Company posted a consolidated Net profit after Tax of `726 crores for the quarter,
after incorporating the financials of subsidiaries, joint ventures and associates.
Net gearing (Net Debt to Equity) at consolidated level was 2.15x at the end of the
quarter (as against 2.27x at the end of 1Q FY2017), and Net Debt to EBITDA at
consolidated level stood at 4.82x (as against 5.69x at the end of 1Q FY2017).
Other key updates:
Iron Ore Mines in Karnataka:
The Company has been declared a “Preferred Bidder” for 5 Mines in the Auctions for
Category ‘C’ Mines conducted by the State Government of Karnataka in October 2016.
These mines have estimated resource of about 111 million tonnes as per the tender
document. The Company endeavor to commence mining operations at these mines in
due course after completing all the requisite steps as per the tender document and
seeking all the statutory clearances per due process.
World Steel Association Award:
During the quarter, the Company received ‘Steelie Award 2016’ (in the innovation
category) by the World Steel Association “for the development of advanced high
strength automotive steels with speed and innovation”.
With an objective to make the Company’s equity shares more affordable to the small
investors and to boost the liquidity of the shares, the Board of Directors of the
Company have approved to sub-divide (split) the equity shares of the Company having
a face value of `10/- (Ten only) each into ten equity shares of face value of `1/- (One
Only) each. The sub-division of equity shares will be subject to approval of the
shareholders and any other statutory and regulatory approvals. There will be no change
in the authorised and paid up share capital of the Company post this shares split.
Global economic growth outlook for CY2016 remains range-bound at 3.1%. The
International Monetary Fund (IMF) has revised down its CY2016 growth projections for
advanced economies to 1.6% primarily due to weaker growth in the US. Recent print
and sustained accommodative policy stance indicate that the US growth recovery
continues to moderate. While the Euro area growth trajectory continues to be
supported by an expansionary monetary policy and subdued commodity prices,
uncertainty around the impact of ‘Brexit’ remains an area of concern. Japan’s economic
growth was weaker in 2QCY16 and it continues to be weighed down by weaker external
demand and private investment.
The IMF has marginally increased its CY2016 growth projections for the emerging
market and developing economies to 4.2%. However, the outlook for these economies
is uneven. The growth in emerging Asia, and especially India, continues to be resilient
but Sub-Saharan African economies are experiencing a sharp slowdown due to lower
commodity prices. China growth rate remains within the official target range of 6.5%-
7.0%, but rebalancing and associated spill-overs continue to be pertinent.
Global steel production, after remaining flat in 2QCY16, grew by 1.7%YoY in 3QCY16
amidst weak demand. Steel production in China grew by 3%YoY during the quarter.
With a surge in production not being supported by domestic demand, exports from
steel surplus countries like China, Japan, Korea and Russia continue to flood global steel
markets. The Japanese/Korean exports continue to be at a sharp discount to their
domestic market prices.
In recent months, steel spreads have seen a compression as coking coal prices have
surged sharply on the back of tightness in physical markets. As coal supply normalises,
coal prices are not likely to sustain at such high levels over the medium term. At the
same time, steel prices in Asia and Europe have started moving up in recent weeks –
reflecting a movement in raw material prices.
In India too, steel production ramp-up was faster than demand improvement. In
1HFY2017, crude steel production increased by 7.5%YoY whereas apparent finished
steel consumption grew by 3.6%YoY. At the same time, the steel imports have come
down by only 35% against expectations of a 50% decline, despite initiation of various
trade remedial measures by the government. Therefore, progress on effective trade
remedial measures is imperative for the health of the industry.
Indian steel demand growth outlook is gradually improving. Government spending data,
thrust on renewable energy sector, better credit deployment in the roads sector, higher
than budgeted Railway Capex, and robust port traffic growth point towards an
improving demand environment. Normal monsoon and Seventh Pay Commission
awards are likely to drive consumer discretionary spending in the on-going festive
JSW Steel Ltd., belonging to the JSW group, part of the O P Jindal Group, is one of the lowest cost
steel producers in the world. The group has diversified interests in mining, carbon steel, power,
industrial gases, ports and cement. JSW Steel Limited is engaged in manufacture of flat and long
products viz. hot rolled coils, cold rolled coils, galvanised products, galvalume products, colour
coated products, auto grade / white goods grade flat products, bars and rods. Incorporated in
1994, JSW Steel Limited is one of the largest producers and exporters of coated flat products in
the country with presence in over 100 countries across five continents.