JSW Steel – India’s largest steel producing company with an installed steel making capacity of 18 MnT pa announced its quarterly results for Q3 FY19 today. The company reported 3% increase on Y-o-Y basis in crude steel output in Q3 FY19 and maintains its production guidance of 16.75 MnT in FY19.
Below are highlights of the conference call conducted:
1.Crude steel output inched up quarterly basis – Company’s crude steel output inch up by 1% to 4.23 MnT in Q3 FY19 as compared to 4.18 MnT in Q2FY19. Although on yearly basis crude steel output increase by 3% in Q3FY19 against 4.11 MnT in same quarter of previous year.
Meanwhile in 9MFY19 company’s crude steel output rose by 5% against 9MFY18.
2.Saleable steel sales decline by 7% in Q3 – Company saleable steel sales decline by 7% on quarterly basis to 3.68 MnT in Q3FY19 which was 3.96 MnT in Q2FY19. Meanwhile on yearly basis the same went down by 7% against 3.97 MnT in Q3FY18.
Meanwhile in 9MFY19 steel sales stood at 11.46 MnT, slightly up by 1% against 11.40 MnT in 9MFY18.
3.Company’s EBITDA moved up by 24% in Q3FY19 – Company’s EBITDA registered significant growth of 24% on yearly basis to INR 4,438 Cr as compared to INR 3,573 CR in similar time frame of previous year.
However in 9MFY19 company’s EBITDA stood at INR 14,062 Cr which was INR 8,698 Cr in 9MFY18.
4.Company’s sales guidance likely to fall short by 2-3% in FY19 – Company’s sales guidance which was at 16 MnT for FY19 is likely to fall short by 2-3%.Amid increased inventories of around 3,00,000 tonnes their could be a reduction in sales guidance in FY19.
5.Domestic sales grew by 15% Y-o-Y in Q3FY19-Domestic sales volume witness the growth of 15% Y-o-Y in Q3FY19. Meanwhile sales from automotive sector recorded the significant growth of 23% on yearly basis. Branded sales volumes increased by 9% YoY, Retail sales increase by 3% Y-o-Y basis in Q3FY19.
6. Coking coal prices expected to uptick in Q4FY19- Blended Coking coal prices in Q3FY19 is assessed around USD 195/MT CFR India , stable against last quarter. It is expected to increase by USD 10/MT in Q4 FY19. Coking coal cost increased by 7% Y-o-Y mainly due to higher prices and currency depreciation.
7. Third captive iron ore mine started in Jan’19 –JSW Steel has started production from its 3rd captive iron ore mine block and expected production in FY19 is around 3.5 MnT. If all total 6 mines become operational then annual production of 4.5 MnT pa is expected to come up in FY20.
8. Domestic Demand is anticipated to improve by 7% in FY20- Amid upcoming infrastructural projects,government projects and recent Union Budget announced recently emphasis on railways and real estate sector will push demand in domestic market by 7% to 7.5%.
9.Recent steel price hike by JSW Steel – The company has raised steel prices by INR 500-1000/MT in Feb’19. Prices have moved up in both long and flat steel segment. Prices in domestic market have recovered and global market has also gained momentum
10.Monnet Ispat & Power DRI plant ramped up to full capacity- Monnet Ispat & Energy Limited which was acquired by JSW Steel ramped up DRI plant capacity to 0.53 MnT. Pellet and sinter plants commenced in production Jan’19. Blast Furnace, SMS I & Bar mill expected to be operationalized in Q4 FY19. Monnet Ispat pellet plant was operating at the capacity of 1.2 MnT pa in Q3 FY19. Plan to increase its pellet capacity to 2.5 MnT in next fiscal.
11.Update on Bhushan Power & Steel NCLT process- All resolution applicants, including JSW Steel have submitted their plans to CoC for acquisition of Bhushan Power & Steel on which has then been evaluated. Outcome of evaluation has been given to NCLAT for decisions.
12. Lower exports and increase import volumes led to fall in domestic steel prices- In Q3FY19 Indian steel exports fell by 40% Y-o-Y basis and imports increased by 8% Y-o-Y basis.Since imports of steel from ASEAN countries remained a major concern amid free trade agreement.However exports from India reported decline due to imposed restrictions from various countries like USA and Europe and decline in international steel prices.Thus increase in imports and reduced exports leads to falling steel prices in domestic market.
13. Pipe conveyor belt update – Pipe conveyor project at Vijayanagar for iron ore transportation initial phases are under trial run.
14. Plans to increase DRI capacity at JSW Steel Dolvi – Apart from expanding crude steel capacity from 5 to 10 MnT pa at its Dolvi plant, JSW Steel also plans to augment Dolvi capacity from 10 to 10.66 MnT pa entailing increase in DRI capacity at Salav and modification of SMS at Dolvi for hot charging of DRI is currently under review pending receipt of environmental clearance.
15. JSW Steel’s export volumes dropped in Q3 FY19 – JSW Steel’s export volumes stood at 350,000 MT in Q3 FY19 against 650,000 MT in previous quarter. Weak global demand resulted in fall in export volumes.
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