Tata Steel on Thursday reported a consolidated net loss for the three months to March 2013 at R6,528.51 crore, the result on a non-cash goodwill and impairment charge, of R8,356 crore, taken by the company for assets in Europe, Thailand and India. In the corresponding quarter of FY12, the company had reported a profit of R433.6 crore.
The company has invested £1 billion in its European operations in the past three years and has also mothballed and sold parts of the business. The steelmaker said there were no assets on the block currently, but added it might consider a sale if there was an opportunity to realise value. “Reviewing the portfolio is an ongoing process and we have not put any business on sale right now. However, it could happen tomorrow if we see an opportunity,” Tata Steel group CFO Koushik Chatterjee said after the announcement of the results.
Explaining the reason for the impairment and goodwill charges, Chatterjee said each of the group’s businesses had been tested for impairment and a charge taken wherever the value of the business was found to be lower than the carrying value. “While the value of assets can be written back if the situation improves, goodwill isn’t written back,” the CFO observed.
Despite a challenging economic environment in Europe, consolidated net sales, in Q4FY13, grew marginally to Rs 34,180.05 crore from Rs 33,860.08 crore in the same quarter last year. However, profitability improved by 250 basis points year-on-year to 12.6%, driving up the earnings before interest, tax, depreciation and ammortisation or Ebitda, by 28% y-o-y to Rs 4,368 crore. The group’s gross debt at the end of March 2013 stood at Rs 66,074 crore, while the net debt was Rs 55,421 crore. The company recently raised SGD 300 million through a bond issue.
Chatterjee said the company has tied up project finance of Rs 22,000 crore from a consortium of 21 banks for its Orissa steel project. “Given the economic environment, we can’t expect any improvement in the near term,” Chatterjee said.
Tata Steel's standalone business, based in India fared better than its overseas operations with a Q4FY13 net profit of Rs 1,309.21 crore around 16% lower y-o-y and net sales up 13% to Rs 10,602.88. For FY13, Tata Steel's standalone net profit fell 24% to Rs 5,062.97 crore from Rs 6,696.42 crore last year while net sales grew 12% to Rs 37,725 crore.
For 2012-13, the steelmaker posted a net loss of Rs 7,058 crore, primarily due to the provisions for impairment of assets. Last fiscal, it had reported a net profit of Rs 5,390 crore.
During the fiscal, its net sales grew marginally to Rs 133,416.60 crore from Rs 132,257.36 crore. Ebitda during the full fiscal was lower than that of last year. In 2012-13 Ebitda for Tata Steel stood at Rs 12,654 crore, a drop of 6.4% from Rs 13,533 crore last year. The Ebitda margin for the fiscal also fell to 9.4% from 10.2% last year.
The company's total steel deliveries during 2012-13 stood at 24.13 million tonnes, marginally lower than 24.22 million tonnes last year. During the fourth quarter, the company's steel deliveries stood at 6.56 million tonnes (mt) , marginally higher than 6.22 mt last year.