Sajjan Jindal led JSW Steel Ltd reported a 87% year-on-year (YoY) dip in its consolidated net profit for the March quarter due to lower sales and increased finance costs.
For the quarter ended 31 March 2015, the company’s consolidated net profit was at Rs.62.38 crore as against Rs.482.83 crore in the same quarter last year. Net sales during the quarter were at Rs.12364.36 crore, 12.24% lower compared to Rs.14088.11 crore in the same quarter last year.
Both sales and profits were below expectations. A Bloomberg poll of 18 brokers had estimated net sales at Rs.12471 crore and a poll of 17 brokers estimated net profit at Rs.180.01 crore for the March quarter.
During the quarter, finance costs increased by 9.4% to Rs.857.9 crore as compared to Rs.784.2 crore in the same quarter last year. The company also took a non-cash impairment charge of Rs.25.90 crore as part of the fourth-quarter earnings for assets related to coal block and goodwill, the company said as part of the profit & loss statement.
“The Indian steel industry faced headwinds of a 71% YoY surge in finished steel imports (especially from China, Korea, Japan and Russia) in financial year (FY) 2015, when apparent consumption increased only by 3.1% YoY. Meanwhile, finished steel exports also decreased by 8.1% YoY in FY2015,” the company said in an accompanying press release.
The restart of closed mines in FY2016 will improve domestic iron ore availability but rising steel imports continue to be a concern, the company added.
On Friday, JSW Steel share price closed at Rs.875.45 per share, a fall of 3.3% from its previous close of Rs.905.10 per share. Earnings were released after markets closed.