JSW Steel (JSWSTEEL) Q4 19/20 earnings summary

Executive summary

• FY 2019-20 consolidated revenue was ₹73,326 crore, operating EBITDA ₹11,873 crore and net profit ₹3,919 crore; net profit declined 48% YoY amid weak steel pricing and COVID-19 disruption.

• Crude steel production was 16.06 MnT, down 4% YoY; capacity utilisation averaged 89%, and saleable steel sales were 15.08 MnT, down 4%.

• Strategic progress included securing preferred bids for seven iron ore mines with reserves near 1.2 billion tonnes and completing the Vardhman Industries acquisition.

Financial highlights

• Consolidated operating EBITDA declined 37% YoY to ₹11,873 crore; net profit fell to ₹3,919 crore from ₹7,524 crore, down 48% YoY.

• Consolidated diluted EPS was ₹16.67 versus ₹31.60; EBITDA margin was 16.2% versus 22.4%.

• Standalone revenue from operations fell 17% to ₹64,262 crore; operating EBITDA declined 32% to ₹12,517 crore and PAT fell 35% to ₹5,291 crore.

• Standalone sales realisations declined 14%; exports rose 43% to 2.64 MnT and were 18% of sales volume versus 12% in FY 2018-19.

• Adjusted for the ₹2,150 crore deferred-tax reversal, standalone tax expense and reported profit were materially affected by the one-time tax benefit.

Outlook and guidance

• FY 2020-21 project capex was recalibrated to ₹8,200 crore, plus ₹800 crore to operationalise the seven acquired mines; total planned capex was about ₹9,000 crore versus prior guidance of ₹16,340 crore.

• Dolvi’s 5-to-10 MTPA expansion was expected to be delayed into H2 FY 2020-21; Vijayanagar’s 8 MTPA pellet plant and wire rod mill were targeted for mid-FY 2020-21 commissioning.

• Capacity utilisation was targeted to approach a near-normal run rate by the end of Q1 FY 2020-21; exports were to support volumes, cash flow and inventory liquidation.

• Fixed costs were targeted to decline at least 10% from the FY 2019-20 base through procurement, logistics, overhead and digitalisation measures.

• Domestic steel demand was expected to recover gradually, particularly in H2 FY 2020-21, while near-term demand and workforce remobilisation remained uncertain.