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India’s JSW Steel posts contraction in fourth-quarter margin

JSW Steel Ltd on Friday said core profit margins contracted in the fourth quarter as expenses and weak steel prices weighed amid global headwinds.

Margins on the earnings before interest, taxes, depreciation and amortisation (EBITDA) shrank to 16.9% in the quarter ended March 31, from 19.6% a year earlier.

Consolidated net profit climbed more than 13% to 36.64 billion rupees ($448 million) from 32.34 billion rupees a year earlier.

The year-ago quarter had an exceptional charge of 7.41 billion rupees, barring which the profit fell almost 27%.

Falling steel prices and rising coking-coal costs have squeezed the industry’s profits since the first quarter of last fiscal year.

The company’s total expenses rose nearly 5% to 431.70 billion rupees after cost of raw materials increased nearly 12%.

Rival Tata Steel’s chief executive told Reuters two weeks ago that he expects prices of steel to remain volatile in the range of $500-$700 per tonne, and coking coal to be between $250 and $350 per tonne.

Tata Steel had reported a slump in profit two weeks ago.

“The global economy has decelerated, which goods and commodity inflation cooling off significantly but services inflation staying elevated in developed markets,” JSW said in a statement, adding that aggressive monetary tightening by central banks is slowing down growth.

Revenue from operations for the country’s largest steelmaker by capacity edged barely 0.1% higher to 469.62 billion rupees.

India’s steel exports fell to a five-year low in the fiscal year ended March after the government in May imposed a 50% tax on exports of iron-ore lumps and fines with less than 58% iron content.

The tax was scrapped in November after complaints from miners and steel makers.

JSW Steel reported last month its highest ever quarterly consolidated crude steel output at 6.58 million tonnes, growing 13% from a year earlier as capacity utilisation at the Indian operations improved.

Separately, JSW Steel elevated Deputy Managing Director Jayant Acharya to joint MD and chief executive.

The board also approved raising long-term funds through various instruments, including issuing $1 billion of non-convertible senior unsecured fixed-rate bonds in international markets.

Shares of the company closed 0.3% higher, ahead of its results.
Source: Reuters (Reporting by Varun Vyas in Bengaluru; Editing by Dhanya Ann Thoppil)

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