JSW Steel Surges to Record as Highest Profit Beats EstimatesBy
Company posts record production volumes in first quarter
Industry not out of the woods as China supply weighs: Jindal
JSW Steel Ltd.’s first-quarter profit surged to the highest on record, beating analysts’ estimates, after increased capacity at India’s second-largest producer of the alloy boosted volumes to an all-time high and costs fell. The shares advanced to the highest yet in Mumbai.
Group net income was 11.1 billion rupees ($165 million) in the quarter ended June 30 from 211.9 million rupees a year earlier, the company said in a statement Wednesday. It revised accounting standards to comply with new norms. Profit beat a 7.4 billion-rupee average estimate of 13 analysts compiled by Bloomberg. Sales rose 2 percent to 128.9 billion rupees, while costs fell 11 percent to 104.5 billion rupees.
The Indian steelmaker joins South Korea’s Posco and Nucor Corp., the largest U.S. producer, in reporting higher profit after national governments took steps to stem the tide of imports of cheaper products from China, the world’s biggest maker. Prices have rebounded this year after a run of five annual declines, coinciding with JSW’s capacity increase.
The global steel industry isn’t out of the woods, with supplies from China remaining a significant concern, JSW Steel Chairman Sajjan Jindal said on Tuesday.
India, which has imposed floor prices on imports until August, needs to extend and expand these across products “to ensure that the imports come down, particularly when the Indian steel industry is competitive,” Joint Managing Director Seshagiri Rao said in Mumbai. Prices may be pressured as domestic demand is not very strong, he said.
Shares of the company have doubled in the past year and rose 4.8 percent to close at an all-time high of 1,739.30 rupees in Mumbai on Wednesday. The company produced a record 3.87 million metric tons of crude steel in the first quarter, up 14 percent from a year earlier, while sales rose 8 percent to 3.34 million tons.
While China has pledged to cut as much as 150 million tons of capacity by 2020, the nation continues to export its surplus amid the slowest growth in decades. There’s still huge overcapacity in China, Jindal said. “Our biggest concern is how China plays out and what they do as most of their businesses are run because of the highly subsidized policies of the government,” he said.
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