JSW Steel, in which Japanese steelmaker JFE Holdings owns a 15 per cent stake, reported a net profit drop of 53.5 per cent to Rs 270 crore for the fiscal first quarter ended June compared with a year earlier. That missed the Rs 494 crore expected by brokerages in a Reuters poll.
The steelmaker booked a Rs 590 crore foreign exchange loss due to a weak rupee, JSW Steel said.
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 including ArcelorMittal and POSCO to set up base in the country. But consumption has waned in recent quarters as Asia's third-largest economy slows.
Shares in JSW Steel fell as much as 5.6 per cent, the most since May 16, while the broader Mumbai marked slipped 1.13 per cent.
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. ArcelorMittal, the world's largest steelmaker, said this week it expects European steel demand will fall between 3 and 5 per cent this year.
JFE reported on Thursday a 61 per cent slump in its April-to-June profit compared with a year earlier, missing estimates.
Copyright Thomson Reuters 2012