JSW Steel Reports 70% Decline in Profit Amid Record Steel Production and Sales Growth
JSW Steel, one of India's largest steelmakers led by Sajjan Jindal, reported a significant 70% year-on-year decline in its net profit for the October-December quarter, totaling ₹719 crore. This marks a sharp contrast to the previous year's profit of ₹2,450 crore for the same period. The decline is primarily attributed to rising expenses, including higher raw material costs and energy prices, coupled with tepid demand and lower steel prices.
Despite these challenges, JSW Steel achieved remarkable milestones in production and sales, signaling that the company’s operational growth is still strong, albeit overshadowed by the financial strain.
Production and Sales Growth Amid Difficult Market Conditions
In the third quarter of fiscal year 2025, JSW Steel produced a record-high 7.03 million metric tons of crude steel, marking a 2% year-on-year increase in steel output. The company's saleable steel sales reached 6.71 million metric tons, demonstrating a 12% increase in sales volume compared to the previous year. These results showcase the company's ability to increase output and maintain strong sales in the face of challenging market conditions, particularly in light of the increasing volume of steel imports from China.
However, despite these impressive operational achievements, JSW Steel's revenue from operations showed only a slight decline of over 1%, dropping to ₹41,378 crore compared to ₹42,134 crore in the same quarter of the previous year. This decline was largely due to lower steel prices and a softening demand in both domestic and international markets.
Impact of Rising Expenses on Profitability
The significant rise in expenses has been a key factor behind the 70% drop in net profit. The company's earnings before interest, tax, depreciation, and amortization fell by 22% year-on-year, totaling ₹5,579 crore for the quarter. EBITDA margin also narrowed by more than 360 basis points, reaching just 13.5%,
Despite these hurdles, JSW Steel continues to perform well in terms of capacity utilization. During the October-December quarter, the company operated at 91% capacity, producing 6.82 million metric tons of steel. This represents a 3% year-on-year increase in production compared to the same quarter last year and reflects the company’s efficient use of its resources, even during challenging market conditions.
The Road Ahead for JSW Steel
Looking forward, JSW Steel remains cautiously optimistic about its performance. CEO Jayant Acharya stated that the company expects to achieve 98% of its volume guidance, targeting 28.4 million metric tons of production for fiscal year 2025. Despite the challenges posed by lower steel prices and rising imports, the company is confident that its operational strength, along with ongoing projects and a focus on high-margin products, will help it navigate the difficulties of the coming months.
However, the company will need to continue addressing the challenges posed by global steel price fluctuations and import pressures. With the global steel market facing uncertainty, JSW Steel’s ability to remain resilient through strategic investments, cost reductions, and a focus on quality will be critical to its future success.
