India's leading steel mill - JSW Steel has announced its quarterly results today for Q2 FY'21 and H1 FY21 today. Major highlights of the investors conference call are mentioned below:
1. Capacity utilization level rebounded to 86% in Q2 - The company achieved an average capacity utilization level of ~86% in Q2 on a sharp rebound in business sentiments and a significant improvement in the domestic economic activities spurred by a slew of monetary and fiscal initiatives. In Q1 the same stood at 66% due to nationwide lockdown, disrupted supply chains, and the steep drop in demand.
2. Crude steel output up by 30% in Q2- JSW Steel reported that its crude steel output increases by 30% q-o-q in Q2 at 3.85 mn t which was 2.96 mn t in previous quarter. In H1 FY'21 the same stood at 6.81 mn t decline by 16% against 8.08 mn t in similar time frame of previous year.
3.JSW coated steel performance in Q2 FY'21- During the quarter, JSW steel coated products registered a production volume of 0.51 mn t against 0.30 mn t in previous quarter. Meanwhile sales volume stood at 0.61 mn t against 0.33 mn t in previous quarter.
4. Saleable steel sales jump on revival in domestic demand - Company in its investors call reported saleable steel sales of 4.12 mn t that grew 47% q-o-q triggered by revival in domestic demand. Meanwhile in H1FY21 the same stood at 6.92 mn t against 7.35 mn t in H1 FY'20.
5.Steel export share drops to 28% in Q2 FY'21- The Company has reported decline in steel exports on strong recovery in domestic demand. Share of exports stood at 28% in Q2 FY'21 compared to 57% to its total sales in Q1. Domestic sales grew by about 2.5 times q-o-q.
6. Operating EBITDA jumped three-fold - Company's EBITDA stood at INR 4,176 Cr in Q2 jumped three-fold against INR 1,429 Cr in Q1.
7. Net sales realization up by 11% q-o-q basis- Net sales realization increased by 11% q-o-q, driven by higher steel prices, higher proportion of domestic sales and favorable product mix.
8. Indian auto contracts likely to face a hike of 10-12% in H2 FY'21- Indian automakers are likely to see a price increase of around 10-12% for half-yearly contracts with steel companies, JSW Steel's management highlighted in investors conference call conducted today. Although contracts are under negotiation, but price outlook is positive. Company's automotive steel sales increased by 33% y-o-y in Q2 FY'21.
9.Commenced operations at two new Karnataka iron ore mines in Q2 - JSW Steel has commenced production from two mines from 25th Sep'20 out of the three newly acquired mines. The operations from the third mine is expected to commence soon. Overall dispatches from captive mines in second quarter constituted 27% of iron ore requirements of the company
10. Aim to lower iron ore cost & expenses in Odisha - After resuming operations at its recent iron ore mine blocks won in auction, JSW Steel is working to lower its costs in Odisha. Company's seniors management highlighted that they are working out with local transporters and MDO's in order to lower the transport and mining cost
11. Iron ore shortage in domestic market remains a concern - Domestic iron ore supplies in NMDC Chhattisgarh have been impacted due to monsoons. In addition to it, iron ore supplies from Odisha continue to remain tight as just five of the auctioned mining leases have started production. With existing lessees, working on the same mine due to extension in dispatch date till 31 Oct'20, evacuation is a major concern that company is facing currently.
12. Coking coal prices expected to remain moderate- In Q2 coking coal prices stood around $120/t CFR levels and expected to remain moderate in Q3 due to volatility.
13. Shortfall in crude steel production guidance- Company may foresee a shortfall in crude steel production guidance for FY21 which was set around 16 mn t for FY'21, due tight availability of iron ore.
14. New wire rod mill at Vijaynagar plant - With the improvement in the availability of workforce at all locations, the projects activities picked up momentum. At Vijayanagar, the 1.2 mtpa Wire Rod Mill has been successfully commissioned and trial production is underway.
15.JSW to commission 8 mn t pellet plant in Q3 FY'21 - The company is all set to commission 8 mnt pa pellet plant in Vijayanagar, Karnataka. It is a part of company's cost savings project and it is expected to commission during Q3 FY'21. (
16. SC sets final hearing of JSW's BSPL acquisition case on 3 Nov'20-The Supreme Court of India has scheduled the last hearing of the JSW Steel's much awaited case on Bhushan Power & Steel acquisition on 3 Nov'20, With this, Jindal-led JSW is hoping to see an end to this case, expecting a favorable decision from the apex court. Earlier this year, JSW Steel has got the approval from NCLAT to acquire BPSL with a settlement amount of INR 19,700 cr. to lenders as upfront cash for takeover of the company.
Outlook- JSW steel is targeting installed capacity of 26 mn t by end of FY'21. Out of this organic steel capacity growth is expected be around 23 mn t and rest 3 mn t from BPSL. The company expects its downstream units to add further value to the company in next fiscal.