Tata Steel Q1 Net Profit Crashes.

With global steel prices nosediving while production costs rise, Tata Steel, the country’s largest private steel maker, reported net profit of Rs. 702 crore in the June 2019 quarter, falling 63% year-on-year. The company had reported consolidated net profit of Rs. 1934 crore in the year-ago period. Consolidated revenue from operations remained flat in the quarter, at Rs. 35,382.16 crore.

For India, the company reported standalone net profit of Rs. 1567 crore, 15% lower than the Rs. 1856 crore it reported last year. In India, steel prices declined as subdued economic activity, seasonal slowdown and liquidity issues weighed on domestic consumption. Higher net imports further exacerbated the demand supply balance.

The company reported production of 7.15 MMT in the quarter, with India accounting for 4.5 MMT, higher than the 6.45 MMT and 3.64 MMT respectively reported in the same period last year. EBIDTA in its India business fell 4.71% to Rs. 5117 crore in the quarter, from Rs. 5370 crore in Q1FY19. EBITDA/tonne of steel fell to 12,908 from 16,068 in the quarter, while for the consolidated figures crashed from Rs. 11,740 crore to Rs. 8725 crore.

JSW Steel profits fall drastically due to weak demand.

JSW Steel has registered 56.4% fall in its Q1 of FY19-20 (April-June) consolidated net profit at Rs 1,028 crore on the back of lower sales volumes due to subdued steel demand. The company had reported profit of Rs 2,366 crore in the same period last fiscal.

Even though the company maintained its annual guidance in production, which was up three percent, its sales were down by two percent. Revenue of the company declined 3.4 percent at Rs 19,812 crore against Rs 20,519 crore.

The demand slowdown has led to higher inventory levels. While overall, the inventory was at 1.2 million tons, up 3 lakh tons from a year ago, the finished goods inventory increased to 25 days, from the otherwise 20 days.

But the company is hopeful of demand picking up in the coming quarters on the back of higher Government spending on infrastructure.

Sales improve in the first quarter: Tata Steel

Tata Steel India said its sales in the first quarter of FY20 improved 16% to 3.87 million tonne over the previous year even as liquidity issues and rural stress that impacted domestic consumption, primarily with consolidation of Tata Steel BSL Ltd. for the full quarter.

Production went up 20 per cent to 4.37 million MT in the Q1 against 3.64 million MT with consolidation of Tata Steel BSL for the full quarter due to higher capacity utilisation at both Tata Steel standalone and Tata Steel BSL Ltd.

On the other hand, steel prices across many geographies declined in the first quarter. Input costs too have spiked with a sharp rise in iron ore prices due to supply disruptions and elevated coking coal costs. As a result, market spreads for steel producers globally have been affected.

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