(Reuters) -India’s JSW Steel reported a bigger-than-expected slide in second-quarter profit on Friday as higher imports of cheap finished steel dragged domestic prices to multi-year lows amid subdued demand.
The country’s biggest steelmaker by market cap reported a six-fold decline in profit to 4.39 billion rupees ($52.23 million) for the quarter ended June 30.
Analysts, on average, had expected profit to decline 78%, as per LSEG data.
Steelmakers in India have been battling an influx of cheap imports, mostly from China, followed by South Korea and Vietnam, denting local prices.
This has led the steel ministry to back a temporary “safeguard duty” to help curb Chinese imports. An investigation has also been initiated on certain products imported from Vietnam to analyse their impact on domestic industry.
Domestic steel prices dropped to an over three-year low in the quarter, as per data from commodities consultancy BigMint.
Saleable steel sales dropped 3.3% in the July-September period to 6.13 million tonnes, JSW Steel said in a statement. Production rose 7% to 6.77 million tonnes.
Steel demand in the quarter remained lackluster as higher-than-normal rainfall in the country slowed activity in the infrastructure and auto sectors – key clients for steelmakers.
The company’s revenue from operations fell 11% to 396.84 billion rupees, which also fell short of analysts average estimate of 423.26 billion rupees.
The company cut its capex spending for the current fiscal year to between 160 billion rupees and 170 billion rupees, from the 200 billion rupees expected earlier.
JSW Steel’s shares were down 2.5% after the results, extending decline from earlier in the session.
($1 = 84.0470 Indian rupees)
(Reporting by Manvi Pant in Bengaluru; Editing by Eileen Soreng)
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