Jindal Steel’s Q4 profit down 70% as prices fall, cost of raw material rise

BENGALURU (Reuters) – Jindal Steel and Power Ltd posted a 69.5% drop in quarterly profit on Tuesday, dragged down by lower steel prices and higher costs for raw materials such as iron.

India’s steel industry, already struggling with falling prices, was also hit by an export tax on some steel brokers last year, which was withdrawn in November.

The New Delhi-based company reported a combined profit after tax of 4.66 billion rupees ($56.98 million), down from the 15.27 billion rupees it made last year.

“Rebar prices moved strongly during the first half of the quarter, but corrected sharply in the second half. However, the main raw materials, especially iron ore, remained high during the quarter,” the company added in a statement.

The company’s consolidated depreciation and amortization expenses more than tripled to 8.73 billion rupees in the quarter, while total consolidated revenue fell 1.9% to 157.81 billion rupees.

Weaker steel prices and lower demand in Europe also hit bigger rival Tata Steel, which posted an 83% drop in its quarterly profit earlier in the month.

However, Jindal Steel said that exports accounted for 11% of total standalone sales volume in the quarter, compared to 5% in the previous quarter.

Shares of the company closed down 2.6% on Tuesday, ahead of the results.

($1 = 81.7800 Indian Rupees)

(Reporting by Manvi Pant in Bengaluru)