By Anuran Sadhu
(Reuters) -India’s top steelmaker JSW Steel said it expects improved steel prices in the third quarter after reporting a nearly fourfold rise in second-quarter profit on Friday, driven by higher sales volumes despite lower prices.
The Mumbai-based company kickstarts quarterly results for the industry, which has seen steel prices drop despite the Indian government’s import tariff on some steel products.
However, “steel prices are expected to increase in November-December,” Jayant Acharya, chief executive of JSW Steel, said.
Earlier in the day, the company reported a consolidated net profit of 16.23 billion rupees ($184.43 million) for the quarter ended September 30, against 4.39 billion rupees profit a year ago.
The company, led by billionaire Sajjan Jindal, posted a 20% rise in sales in the quarter, with capacity utilisation in its key market, India, at 92%. This, along with high manufacturing activity in the country, boosted demand.
India’s steel demand is expected to grow by 8%-9% this financial year, on the back of government spending and steady consumption, Acharya said.
He added the company expects prices for its key raw material, coking coal, to increase by $3-$5 per tonne in the quarter ending December 31, while iron prices are expected to decline.
The company’s total expenses in the quarter rose 11.3%, as the cost of materials consumed increased by about 9% from a year ago.
Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded to 17.4% from 14.2% in the year-ago period, but was lower than 18.2% in the previous quarter.
Acharya also said the company’s planned capex from the second half of the current financial year to over the next three years is about 690 billion rupees.
JSW Steel had earmarked 200 billion rupees for capex this financial year, as reported in a July exchange filing.
($1 = 88.0030 Indian rupees)
(Reporting by Manvi Pant and Anuran Sadhu; Editing by Harikrishnan Nair, Mrigank Dhaniwala and Vijay Kishore)
