JSW Steel’s consolidated revenue from operations rose to Rs218,590mn ($2,996.64mn), up by 21pc from the prior year quarter backed by strong steel demand and improved capacity utilization (~91pc) in the quarter, according to the company’s results update. All captive mines of the company (nine in Karnataka and four in Odisha) are operational.
Outlook
The company expects to slightly miss its crude steel production guidance of 16mn mt to achieve 95pc of the targeted output amid iron ore availability constraints in India. JSW is, however, on track to achieve its annual sales guidance of 15mn mt.
In CY2021, global GDP is forecast to grow by 4pc backed by government and central bank policies, but the recovery will be influenced by the pace of vaccination, said the company in the release. The US economy showed resilience amid Fed’s accommodative stance and fiscal stimulus.
Resurgence of Covid-19 outbreaks in Europe and Japan may slower the pace of economic recovery, however, sentiments in EU’s manufacturing sector is relatively strong. The ongoing vaccination campaigns should improve consumption.
The outlook is positive for a broad-based growth across China’s manufacturing, services and investment sectors. But the re-emergence of the virus and slower-than-expected rates of vaccination could impact global economic growth.
In India, the start of vaccination and a decline in COVID-19 cases bodes well for economic recovery in India. Strong rural demand is driving growth in the auto sector, especially in the PV, two-wheelers and tractors segment. Recovery in real estate sector could revive the construction sector. Government spending infrastructure projects including roads, railways, power and urban housing is likely to support recovery. Indian industries are well-positioned to benefit from the reshuffle of global supply chains in a bid to reduce their reliance on China. Domestic steel mills in India have significantly lowered exports to focus on local demand, while steel imports have increased.
Results
Revenues in Q3 improved by 13pc from Q2 fueled by robust demand recovery in India supported by higher government spending. Restocking and better demand from auto, machinery, infrastructure and construction sectors along with policy initiatives including stimulus packages for small enterprises and the production linked incentive (PLI) schemes encouraged manufacturers in India.
| JSW Steel’s Q3FY2021 results | |||||
|---|---|---|---|---|---|
| Consolidated | Q3FY2021 | Q3FY2020 | Change | Q2 FY2021 | Change |
| Revenue | 218,590 | 180,550 | 21% | 192,640 | 13% |
| Operating EBITDA | 59,460 | 24,510 | 143% | 44,140 | 35% |
| Profit after Tax | 26,690 | 1,870 | 1327% | 15,950 | 67% |
| Standalone | |||||
| Revenue | 192,390 | 157,670 | 22% | 167,970 | 15% |
| Operating EBITDA | 56,330 | 26,670 | 111% | 41,760 | 35% |
| Profit after Tax | 28,290 | 6,910 | 309% | 16,920 | 67% |
JSW Steel’s net debt reduced by Rs10,990mn in Q3. The company’s consolidated net debt to equity fell to 1.29x from 1.43x at the end of Q2. Net debt to EBITDA fell to 3.53x from 4.73x at the end of Q2.
Production
In Q3, JSW’s crude steel production rose to 4.08mn mt, up by 2pc from the prior year quarter, while for the nine-month period, production dropped by 10pc from the prior period.
| JSW Steel’s production in Q3 and 9MFY2021 | ||||||
|---|---|---|---|---|---|---|
| Production (mn mt) | Q3FY2021 | Q3FY2020 | Change | 9MFY2021 | 9MFY2020 | Change |
| Crude Steel | 4.08 | 4.02 | 2% | 10.89 | 12.09 | -10% |
| Sales | ||||||
| Rolled – Flat | 2.92 | 2.98 | -2% | 8.03 | 8.22 | -2% |
| Rolled – Long | 0.91 | 0.88 | 4% | 2.14 | 2.66 | -19% |
| —-Semis | 0.06 | 0.18 | -64% | 0.64 | 0.5 | 28% |
| Total saleable steel | 3.9 | 4.03 | -3% | 10.82 | 11.38 | -5% |
Subsidiaries
* In Q3, JSW Steel Coated’s production volume were 470,000mt with sales volume of 610,000mt. The company’s PAT was Rs2,690mn.
* US-based Plate and Pipe Mill, Texas plant is under scheduled shutdown. Sales volumes in Q3 were 18,183nt plates and 150nt pipes. The company reported EBITDA loss of $8.45mn in Q3.
* JSW Steel USA Ohio idled operations for a furnace upgrade in Q3. Sales volumes were 10,892nt. The company reported EBITDA loss of $21.26mn in Q3.
* JSW Steel (Italy) produced 84,063mt rolled long products in Q3. Sales of steel products were 83,994mt. The company reported EBITDA loss of €0.52mn ($0.63mn) in Q3.
Key updates
* JSW Steel Coated Products completed the acquisition of Asian Colour Coated Ispat (ACCIL) through its wholly-owned subsidiary Hasuad Steel on Oct 27. The company manufactures downstream steel products at two manufacturing plants; one in Khapoli, Maharashtra and the other at Bawal, Haryana.
* In Q4, JSW Steel will commence commissioning of Dolvi’s expansion project to an annual capacity of 10mn mt from 5mn mt. Majority of the operations are scheduled to be completed in the March quarter. Integration and stabilization of operations will start in Q1FY2022. The project was delayed due to travel and visa restrictions imposed to curb the spread of COVID-19 pandemic.
* One CC galvanising line of Vijaynagar plant’s CRM-1 complex expansion has been commissioned, and the second line is scheduled to be commissioned by Q1FY2022. The plant’s 8mn mt annual capacity pellet plant is under commissioning.
* Expansions of Vasind and Tarapur downstream projects under commissioning, except the annual 0.45mn mt capacity CC galvanising line at Vasind. Full commission will be completed in the March quarter. The Vasind 0.45mn mt CGL is scheduled to be commissioned in Q1FY2022.
* The 0.22mn mt annual capacity addition at Kalmeshwar plant’s PPGL unit to be commissioned in the March quarter.
($1 = €0.82)