JSW Steel Q3 net down 18 percent, below expectations

MUMBAI Mon Jan 28, 2013 4:21pm IST

Labourers work on steel pipes at a construction site of an overhead flyover in Chennai January 21, 2010. REUTERS/Babu/Files

Labourers work on steel pipes at a construction site of an overhead flyover in Chennai January 21, 2010.

Credit: Reuters/Babu/Files

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MUMBAI (Reuters) - JSW Steel Ltd(JSTL.NS), India's No.3 steelmaker, posted a lower-than-expected quarterly net profit as higher raw material costs due to shortage of iron ore supplies, and foreign exchange losses hurt growth.

The company, in which Japanese steelmaker JFE Holdings Inc (5411.T) owns a 15 percent stake, reported net profit of 1.37 billion rupees on standalone basis for the fiscal third quarter ended December, down 18 percent from a year earlier.

Net sales rose 5 percent from a year earlier to 82.75 billion rupees. The company did not immediately disclose consolidated results, that include numbers from its subsidiary JSW Ispat (JSWI.NS).

Analysts had expected JSW Steel to post a standalone net profit of 3.1 billion rupees, according to Thomson Reuters data.

The steelmaker blamed the lower profits on shortage of ore supplies and said profits were also dragged down after exceptional charges, including a 2.7 billion-rupee foreign exchange loss due to a weak rupee, and another 600 million rupees write-down on its investment in a U.S. plate mill.

Production at JSW Steel's 10-million-tonne Vijayanagar plant in the southern state of Karnataka has been affected since August 2011 after India's top court put a ban on mining in the state due to illegalities in some mines.

JSW, which buys its entire iron ore requirement locally, has been forced to pay higher prices for the key raw material at e-auctions sanctioned by India's top court.

Indian steel demand has been growing at near double-digits over the past few years, pushing local firms to boost capacity and drawing global steelmakers, but consumption has slowed in recent quarters as economic growth in the country eases.

Globally, steelmakers are struggling with the debt crisis in Europe, weak growth in Japan and a slower pace of expansion in China, the world's largest producer and consumer.

Shares in JSW Steel, valued at $3.6 billion, closed 0.7 percent higher in a flat Mumbai market.

(Reporting by Prashant Mehra; Editing by Matt Driskill and Muralikumar Anantharaman)

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