Steel Authority of India Posts Sixth Straight Quarterly LossBy
Company joins Tata Steel in reporting losses for the period
Shares still climbed this year as government curbed imports
Steel Authority of India Ltd., the country’s top producer, booked a loss for the sixth straight quarter, almost in line with analyst estimates, as costs increased.
The company lost 7.3 billion rupees ($108 million) in the three months through September compared with a shortfall of 11.1 billion rupees a year ago, the company said in a statement on Thursday. That compares with 7.6 billion rupees estimated by 14 analysts in a Bloomberg survey. Sales climbed about 20 percent to 124.3 billion rupees.
“The company is certain that it will be able to improve its physical and financial performance in future,” because of government measures to boost demand, efforts to reduce costs and improvements in productivity, SAIL said in a statement.
India has tightened curbs on cheaper imports from countries including China as domestic mills ramp up production on expectations that Prime Minister Narendra Modi will boost spending on infrastructure, roads and power. Modi’s move last month to scrap higher denominated currency may hurt local demand, limiting suppliers’ scope to increase prices, according to Jefferies India Pvt.
SAIL’s costs climbed 11 percent to 131.3 billion rupees from the same quarter a year ago and the company also paid out 1.64 billion rupees as voluntary retirement compensation to employees. For the six month period ended Sept. 30, the company reported a loss of 12.67 billion rupees compared to a loss of 13.56 billion rupees during the year earlier period.
The producer joins Tata Steel Ltd. in posting a negative result for the period partly on weaker product prices and as Tata’s operations in the U.K. remained a drag on earnings, while the nation’s second-largest producer JSW Steel Ltd. reported a third straight profit on record output.
Shares of SAIL climbed 3.2 percent to 55.25 rupees at close in Mumbai on Friday. The stock has climbed 14 percent this year, after plunging 41 percent in 2015, as government measures curb imports and prospects for domestic demand improve.
The mill is spending 40 billion rupees this year on increasing capacity by 43 percent to 21.4 million metric tons by 2018, part of a longer term goal of achieving 50 million tons in the next decade.
Jindal Steel & Power Ltd. also reported a loss in the quarter ended September, the New Delhi-based steelmaker said in a separate statement Thursday. The shortfall was 7.46 billion rupees compared with 9.1 billion rupees a year earlier, it said. The company’s shares rose 1.5 percent at 74.20 rupees.