Leading steel manufacturing company JSW Steel Ltd posted its Q1 FY23 results on July 22, 2022.
The company reported a dip of 85.7% YoY (Year on Year) in its net profit which came in at Rs 839 crore for the quarter under review. It has reported a net profit of Rs 5,900 crore in the year ago period. On a sequential basis, the net profit took a plunge of nearly 80% to Rs 839 crore from Rs 3,343 crore in the previous quarter.
The sharp dip in JSW Steel’s net profit is largely attributable to a 27% YoY dip in exports, primarily due to weaker global demand. The Russia-Ukraine crisis furthered the crash in demand which led to fewer orders for JSW Steel. Amid a worsening climate with falling steel prices across the globe, and adding fuel to the fire, the Government of India also imposed a 15% export duty on steel export. In a statement, however, the company said that it hoped the export duty is only a temporary measure and may be tapered off as inflation starts to ease.
JSW Steel’s revenue from operations was up 31.7% QoQ to Rs 38,086 crore from Rs 28,902 crore in Q4 FY22. However, the revenue from operations on a YoY basis was down by 18.7% to Rs 38,086 crore from Rs 46,895 crore in the corresponding quarter in the previous fiscal year.
Crude steel production remained largely flat on QoQ basis at 5.00 million tonnes.
Crude steel production on a YoY basis was up by 22% to 5.00 million tonnes from 4.10 million tonnes in the year ago period.
Steel sales down by 21% QoQ to 4.03 million tonnes from 5.11 million tonnes in the previous quarter.
Steel sales up 12% YoY to 4.03 million tonnes from 3.61 million tonnes in the year ago period.
During the first quarter of FY23, high inflation across major economies on the back of supply chain disruptions and the Russia-Ukraine conflict has impacted the global economic outlook. While India has been relatively resilient with economic activity recovering from the Covid induced slump, high inflation and policy rate tightening across the world have become formidable headwinds.
The global economic outlook has weakened due to high inflation across most economies, with elevated energy and food prices affecting consumption. The ongoing Russia-Ukraine conflict and frequent Covid related lockdowns in China have disrupted global supply chains, and caused spikes in energy prices. The World Bank, in its June outlook, has reduced its global growth forecast to 2.9%, from 4.1% in January.