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India's JSW Steel cuts FY'20 capex plans as Q2 pretax profit slumps YOY

JSW Steel Ltd. posted a consolidated net profit of 25.36 billion Indian rupees for the second quarter of its fiscal 2020, increasing from 20.87 billion rupees in the year-ago period, with results benefiting from the reversal of deferred tax provisions following changes to Indian tax legislation.

Its pretax profit slumped to 6.88 billion rupees, from 30.23 billion rupees a year ago.

The company slashed its fiscal 2020 capital expenditure guidance to 110 billion rupees from 157.08 billion rupees due to market conditions, which prompted it to delay 47 billion rupees of spending on a number of downstream projects to fiscal 2021.

Revenue dropped to 175.72 billion rupees from 215.52 billion rupees as operating EBITDA plunged to 27.31 billion rupees from 49.06 billion rupees. A severe monsoon, weak demand, tight liquidity conditions, planned shutdowns and a sharp correction in steel prices weighed on results, the company said Oct. 23.

Crude steel production fell 8% year over year to 3.84 million tonnes, while steel sales declined 9% to 3.60 Mt. The company said steel demand in its home market was subdued amid muted investment spending, tighter credit availability and a slowdown in the automotive sector.

JSW expects to reach about 97% of its fiscal 2020 guidance for crude steel output and salable steel sales as the volumes lost during its fiscal first half are unlikely to be recovered during the second half. The company is targeting crude steel output of 16.95 Mt and salable steel sales of 16.00 Mt during the current financial year.

As of Oct. 22, US$1 was equivalent to 70.82 Indian rupees.