Welspun Corp’s (WCL) pipe production declined by 8pc to 119,000mt in Q1 (April-June) from 130,000mt in the prior-year quarter on a consolidated basis. Sales dropped by 21pc to 175,000mt in Q1 from 222,000mt in the prior-year quarter. Income from operations fell to Rs12.99bn ($174.5mn), down by 37.2pc from the prior year’s quarter. In Q1, EBIDTA was at Rs2,030mn.
The company expects demand for steel pipes to improve with higher levels of economic activities amidst optimism that the vaccination program would stimulate an economic recovery. The government thrust to improve infrastructure will benefit pipe manufacturers.
The company is also upbeat on water business with the announcement of Jal Jeevan mission by the government of India. The project is expected to boost demand for both DI and HSAW pipes.
Despite strong demand, there has been a sharp rise in input costs, which has impacted the budgeted cost of projects. As a result, project costs in the water segment will have to be revised upwards.
The company is also in discussions for several export orders, mainly for gas and slurry pipelines, from Australia, Malaysia, Middle East, East Africa and Chile.
WCL lacks visibility on new orders for its Little Rock facility and has undertaken cost rationalization measures. The company sees North American business experiencing a slowdown.
The company’s Saudi Arabian unit was challenged by a sharp rise in steel prices that impacted margins on some unexecuted quantities. At these levels of crude oil prices, the company remains optimistic about development projects at Saudi Aramco.
WCL plans to commission a greenfield project to produce thermo-mechanical (TMT) bars of 350,000mt which is expected to start by September 2022. Currently, the company produces sponge iron and billet.
BK Goenka, Chairman, Welspun Group said, “Our performance has been stable despite the second wave of COVID-19. Demand is expected to recover supported by the government’s thrust on water supply and gas pipeline infrastructure”
Welspun Corp’s annual capacity exceeds 2.5mn mt. In India, the company has facilities in Dahej, Anjar, Mandya and Bhopal, while its overseas units are located at Little Rock in the US and Dammam in Saudi Arabia.
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