A Vision to Execute Better. Everyday. JSW Steel Limited Q3 FY 2019-20 Results Presentation Jan 24, 2020 1
Key highlights – Q3 FY20 Revenue from operations : ₹ 18,055 crore Operating EBITDA : ₹ 2,451 crore Consolidated Net Profit : ₹ 187 crore performance Net Debt to Equity : 1.35x and Net Debt to EBITDA : 3.71x Diluted Earnings Per Share : ₹ 0.87 per share Operational Production from captive Iron ore mines at 1.22mt in 3Q and 3.26mt in 9M FY20 performance Consummated acquisition of Vardhman Industries Limited (VIL) Other highlights 5th Captive mine in the state of Karnataka (Rama Mine) commenced operations in January 2020, 6th Mine (Ubbalagundi Mine) expected to commence shortly 2
Agenda Business Operational Financial Projects Update Environment Performance Performance 3
Global economy GDP growth forecast (%YoY) IMF expects global GDP growth for CY 2020 at 3.3%, up from CY19 CY20 2.9% of 2019 6.1% 6.0% 5.8% US continues to witness strong consumer spending and 4.8% 4.4% buoyant housing market. Fading away of trade tensions likely 3.7% 3.3% 1.3% 1.0% to improve business sentiment and support moderate 2.9% 1.2% 0.7% 2.3% 2.0% 1.7% expansion in manufacturing 1.6% World AMEs US Euro Area Japan EMDEs India China Easing of trade conflicts, political stability and policy stance to anchor Euro area’s growth trajectory Index of Industrial Production (%YoY) 10 US Eurozone China Japan Japan growth outlook improves on the back of fresh round of 5 fiscal measures 0 Stable growth outlook in China as policy makers respond with appropriate fiscal and monetary measures -5 Synchronised monetary easing and fiscal measures to aid -10 global growth, heightened geopolitical tension poses risk Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Global economy expected to stabilize as trade frictions ease Source: IMF (Jan 2020),Eurostat, METI Japan, Federal Reserve, NBS China 4
Global steel China Steel Production and Export (mt) Global Crude Steel production (mnt) 100 10 China Crude Steel Production (LHS) Exports (RHS) 3.5% 2018 2019 +62 80 8 -14 1,849 1,786 60 6 +76 8.3% -1.6% 40 4 996 920 866 852 20 2 0 0 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 China World World ex-China Raw Material Price Trend HRC prices US$/t HCC Premium LV ($/mt) (RHS) Iron Ore 62% Fe ($/mt) (LHS) 1,200 N.America ExW N.Europe ExW 150 400 China FOB Black Sea FOB 1,000 300 100 800 200 600 50 100 400 0 0 200 Dec-16 Jul-17 Feb-18 Sep-18 Apr-19 Dec-19 Dec-16 Jul-17 Feb-18 Sep-18 Apr-19 Dec-19 Restocking and modest uptick in demand to support steel spreads Source: WSA ( Figures of 2018 have been restated ) , Bloomberg, Platts 5
Indian economy PMI Composite PMI IIP and Manufacturing PMI prints have improved from recent Manufacturing PMI 55.0 lows, signaling an improvement in business confidence Consumer sentiment remains uncertain with weaker growth in 53.0 automotive and consumer durable volumes 51.0 GFCF growth till 2QFY20 is weak driven mainly by lower 49.0 Government capex. Recently announced INR 102 trillion spend plan on National Infrastructure Pipeline (NIP) over the next 5 years is likely to Total Vehicle Production vs. IIP IIP - Use Based (Consumer) 170 IIP (YoY) (lhs) support recovery in GFCF cycle. 80% of this planned spend is Durables Non-Durables Total Vehicle Production ( '000s) attributed towards roads, urban housing, railways and power 3000 (rhs) 9% 150 7% Monetary policy stance is supportive for economic expansion 5% 2000 3% Volatile crude oil prices, elevated inflation and lack of 130 1% 1000 improvement in credit availability pose risks to growth outlook -1% -3% -5% 0 110 Dec-16 Sep-17 Jun-18 Mar-19 Dec-19 Dec-16 Dec-17 Dec-18 Dec-19 Supportive fiscal and monetary policies to revive business and consumer sentiment Source: CSO India, SIAM,Bloomberg 6
Indian steel – Q3 FY20 Production and Consumption (mt) Steel Imports (mt) Steel Exports (mt) -26% 2.6% 2.10 1.57 86% -2.7% 3.69 1.98 0.19 27.96 1.11 27.21 0.07 24.51 23.88 0.54 1.91 2.58 1.50 1.44 Q3 FY19 Q3 FY20 Q3 FY19 Q3 FY20 Crude Steel Production Finished Steel Consumption Semis Finished Finished Semis Q3 FY19 Q3 FY20 Trend of monthly steel imports into India FTA China Others Total 712 757 630 599 834 882 593 650 450 465 663 716 imports 1% (kt) 14% 18% 17% 20% 19% 21% 24% 21% 27% 26% 28% 30% 20% 14% 12% 11% 19% 20% 26% 16% 18% 9% 19% 78% 68% 66% 66% 66% 61% 60% 60% 57% 56% 55% 56% Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Government measures and supportive policies augur well for steel demand outlook Domestic steel demand likely to grow by 6.5% – 7% in FY2020 Source: JPC, FTD (US Census Bureau) Source: JPC, FTD (US Census Bureau) 7
Agenda Business Operational Financial Projects Environment Performance Performance Update 8
Quarterly volumes- standalone Crude Steel Production Steel Sales 5% -5% 10% 12% YoY QoQ YoY QoQ 4.23 4.02 3.84 4.03 3.68 3.60 Q3 FY19 Q3 FY20 Q2 FY20 Q3 FY19 Q3 FY20 Q2 FY20 Q3 FY19 Q3 FY20 Q2 FY20 Q3 FY19 Q3 FY20 Q2 FY20 Flat 2.90 2.86 2.71 Flat 2.61 2.98 2.58 0.89 0.88 0.85 Long 1.04 0.89 0.82 Long 0.18 0.18 Semis 0.17 All figures are in million tonnes 9
9M FY20 volumes- standalone Steel Sales Crude Steel Production -1% -3% YoY YoY 11.46 11.38 12.52 12.09 9M FY19 9M FY20 9M FY19 9M FY20 9M FY19 9M FY20 9M FY19 9M FY20 Flat 8.73 8.48 Flat 8.21 8.22 2.88 2.76 2.65 2.66 Long Long Semis 0.60 0.50 All figures are in million tonnes 10
Quarterly sales highlights – consolidated 11% 13% YoY QoQ 3.62^ 3.56^ 4.03^ 24% 10% 31% 45% 50% 3.27* 54% 3.08* 16% 11% 2.47* 12% 33% 27% 21% 16% 13% 31% 56% 56% 57% 34% 34% 33% Q3 FY19 Q3 FY20 Q2 FY20 Q3 FY19 Q3 FY20 Q2 FY20 OE Retail Auto Exports VA Special prodcuts Other products Sales volumes increased by 11% YoY and 13% QoQ; domestic sales volumes up 25% QoQ Automotive Steel Sales grew by 10% QoQ, despite an overall decline in Passenger and Commercial Vehicle by 13% Share of value added and special product increased to 50% from 46% in Q2 All figures are in million tonnes. * Domestic sales, ^ Total sales (JSW Steel Standalone + JSW Steel Coated Products after netting-off inter- company sales). Value added and Special products (VASP) include HRPO, CRFH, CRCA, ES, Galvanised, Colour Coated and Special Bars and 11 Rounds. Special products include HR special, TMT Special and WR Special
Retail segment highlights – consolidated 33% 16% QoQ YoY 892 1,032 774 500 413 403 532 479 371 Q3 FY19 Q3 FY20 Q2 FY20 Others Branded Products All figures in charts are in kt Overall retail sales increased by 16% YoY and 33% QoQ, driven by strong restocking demand Share of Branded products increased to 49% vs 46% in Q3 FY2019 Engaged with over 7,500 influencers and contacted 2,000 end customers 12
Product/ Grade approved in Q3 FY20 IS10748GR4 ( HRPO ) IS10748 GR1 ( HRPO ) Seat Frames Cross Cowl Bar 50C530 (ES ) S550MC (CRCA) Seat Rail Motors 13
Agenda Business Operational Financial Projects Environment Performance Performance Update 14
Financials – standalone ` crore Particulars Q3 FY20 Q3 FY19 # Q2 FY20 Revenue from operations 15,767 18,539 15,520 Operating EBITDA 2,667 4,497 2,796 Other Income 135 62 188 Finance Cost 988 982 1,075 Depreciation 893 864 874 Profit Before Tax 921 2,713 1,035 Tax 230 791 (1,882) Profit after Tax 691 1,922 2,917 Diluted EPS* 2.86 7.95 12.07 # Restated pursuant to the merger of certain wholly owned subsidiaries 15 *Not Annualized
Operating EBITDA movement – standalone ` crore 428 4,341 4,497 2,667 2,084 EBITDA Volume NSR Cost EBITDA Q3 FY19 Q3 FY20 16
JSW Steel Coated Products Million tonnes Volumes Q3 FY20 Q3 FY19 Q2 FY20 Production* 0.47 0.42 0.42 Sales 0.52 0.42 0.43 ` crore Key P&L data Q3 FY20 Q3 FY19 Q2 FY20 Revenue from 2,982 2,964 2,788 Operations Operating EBITDA 134 97 153 Profit after Tax 50 18 157 * Galvanised, Galvalume and Tinplate 17
US Plate & Pipe Mill Q3 FY20 Production (net tonnes) Q3 FY19 Q2 FY20 Plate Mill 70,479 91,183 58,106 Utilization (%) 29% 38% 25% Pipe Mill 14,669 16,367 15,746 Utilization (%) 11% 12% 11% Sales (net tonnes) Q3 FY20 Q3 FY19 Q2 FY20 Plate Mill 52,749 69,634 53,333 Pipe Mill 11,328 16,737 7,020 USD mn Key P&L data Q3 FY20 Q3 FY19 Q2 FY20 Revenue from Operations 63.98 104.70 59.12 EBITDA (12.58) 4.06 (11.21) Net tonnes = 0.907 metric tonnes 18
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