JSW Steel Ltd. posted the lowest profit in five quarters weighed by a decline in product prices and a steep drop in exports amid capacity expansions that raised concerns over rising debt.
Group net income at India’s top steelmaker fell 7.4 percent from a year earlier to 16.24 billion rupees ($227 million) in the October-December period, it said Wednesday in a stock-exchange filing. That missed the 17.3 billion-rupee average of 14 estimates compiled by Bloomberg and was the lowest profit since the quarter ended September 2017.
- The Mumbai-based producer said exports during the quarter dropped sharply as both steel demand and pricing in international markets witnessed a soft patch. It expects to fall short of its 16 million ton overall sales guidance for the fiscal year ending March by two to three percent.
- Steel prices have declined on worries of a slowdown in China, which grew at the weakest pace since 2009 last quarter. Domestic prices have fallen 11 percent since November and should decline further as they are at a three to four percent premium to imports from countries with free-trade agreements with India, Jefferies LLC said last week.
- Analysts are also worried about the company’s debt, which has risen because of acquisitions and capacity expansion at existing facilities. The Sajjan Jindal-led producer is a frontrunner to win the assets of Bhushan Power & Steel Ltd. after an appeals court this week rejected Tata Steel Ltd.’s plea against JSW’s revised offer.
