JSW Steel – India’s largest steel producing company with an installed steel making capacity of 18 MnT pa announced its Q1FY20 financial year results today. Company maintains its production & sales guidance for FY20 as announced earlier. Below are highlights of the conference call conducted:
1.Crude steel output inch up by 2% Q-o-Q in Q1FY20- Company’s crude steel output stood at 4.24 MnT in Q1FY20 up by 2% as compared to 4.17 MnT in previous quarter.However on yearly basis the same moved up by 3% in Q1 as compared to 4.11 MnT in Q1FY19.
2.Saleable steel sales fell by 13% Q-o-Q in Q1FY20- Company sale-able steel sales stood at 3.75 MnT in Q1FY20 move down by 13% as compared to 4.29 MnT in previous quarter.However on yearly basis the same reported marginal fall of 2% in Q1 against 3.83 MnT in Q1FY19.
3.Company’s standalone operating EBITDA decline by 14% Q-o-Q in Q1FY20- Company’s operating EBITDA stood at INR 3,726 Cr in Q1FY20 down by 14% on quarterly basis as compared to INR 4,341 Cr in previous quarter. However on yearly basis the same plunged by 23% in Q1FY20 as compared to INR 4,822 Cr in Q1FY19.
4. Company’s steel exports increase by 34% in Q1FY20- Company’s exports increased by 34% on yearly basis to 0.62 MnT and accounted for 17% of total shipments in Q1FY20. Weaker market sentiments in domestic market lead to surge in export volumes in first quarter of FY20.
5.JSW Steel coated products performance in Q1FY20- Production volume (Galvanized/Galvalume) in Q1FY20 stood at 0.43 MnT which was stable against previous quarter.Meanwhile sales volumes stood at 0.45 MnT in Q1FY20 against 0.49 MnT in Q4FY19. Meanwhile company is also planning to expand 1 MnT of capacity for color coated products from 0.7 MnT pa to 1.7 MnT pa.
6.Coking coal consumption cost to move down in Q2FY20- On an average basis blended coking coal cost stood at USD 195-197/MT CFR basis in Q1 FY20 which is expected to move down by USD 5/MT in Q2 FY20.
7.Optimistic about domestic demand in Q2- Increase in Govt.expenditure along with easing credit facility from banks will help to improve the demand in domestic market.Amid ahead of festive season an uptick in sales of passenger vehicles in expected.Also allocation of proper funding in government projects and improvement in auto sector shall impact the domestic demand in H2FY20.
8.JSW Steel eyes 7.5-10 MnT iron ore production from its captive mines in FY21 : JSW Steel has started iron ore operations at its four ‘C’ category mines out of six mines it won earlier in Karnataka. The other two mines are expected to come into operations soon. These in total would produce around 4.5-5 MnT iron ore.Also the company has recently won three more iron ore mining leases which would give production of 2.5-4 MnT pa. Thus in total 7.5-10 MnT iron ore output is expected from company’s captive mines in next fiscal.
9.Pipe conveyor for iron ore transportation in Vijayanagar saved INR 155 per tonne – Pipe conveyor for iron ore transportation in Vijayanagar got fully operationalised. The company is moving around 10,000-15,000 MT iron ore per day via conveyor belt. In Q1 FY20, the company transported around 260,000 MT iron ore which lowered cost by INR 155 per tonne.
10.Auto sales improved by 5% Q-o-Q- Automotive Steel Sales increased by 4.6% QoQ, despite an overall decline in passenger and commercial vehicle production.However the same reported decline by 20% on yearly basis.
11.Landed cost of steel imports is at par with domestic prices– Company officials mentioned that amid slowdown in government expenditure and lack of credit facility along with tedious growth in auto sector resulted to decline in domestic steel prices. Thus landed cost of imports is at par with domestic prices.
12.Company to lower iron ore imports, focus on domestic sourcing – Amid high global prices, JSW Steel is focussing more on domestic iron ore sourcing (Karnataka, Odisha, Chhattisgarh) and not on imports.
13. Odisha to auction 44 iron ore mines in Aug’19 – The 44 iron ore mines that are due to expire in 31 Mar’2020, Odisha govt is to auction them in Aug’19.
14. Monnet Ispat produced 431,000 MT pellets – Pellet production from Monnet was recorded at 431, 000 MT and DRI production of 215,000 MT in Q1 FY20. Steel making operations were impacted by maintenance shut down and repairs. Production from Blast Furnance expected to restart and ramp up during Q3 FY20.
15. Benefits on replacing imported coal from captive mines – JSW benefitted from cost savings initiatives like increase in PCI (Pulverised Coal Injection) in blast furnaces, ramp up of supplies from captive mines
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