Corus still strains Tata Steel financials

Written by fe Bureau | Mumbai | Updated: Jun 28 2009, 02:58am hrs
Tata Steel Ltd, the world's sixth largest steel manufacturer, after posting a dip of about 60% in its consolidated net profit is still on a constant effort to overcome the slowdown in the Europe, where plants are still operating at below 50% capacity.

Kirby Adams, CEO of Tata Steel Europe, while announcing the FY09 results said the production cut in Corus for the June 2009 quarter was at the same level as that in March 2009 quarter, which is at an average of about 47%. "Corus' iron and steel division is working at 47% of the total capacity whereas its engineering and steel businesses are working at about 25-30% of the capacity," said Adams.

Sluggish demand in Europe had forced Corus to cut its crude steel production to 40%.

For FY09, steel deliveries and liquid steel production of Corus fell by 14% and 20% to 19.69 million tonne (mt) and 16.21 mt, respectively, reflecting a weak second half of the year, the company said. However, the turnover increased by 9% to Rs 1,09,570 crore. EBIDTA decreased by 2% to Rs 8,906 crore in FY09 against FY08.

Tata Steel shares on Friday slipped 2.53% to close at Rs 387.90 on the BSE.

Meanwhile, Corus has identified 2,045 jobs being at risk, of which 1,500 will be at its production facilities, 800 in engineering steel sites at Rotherham and Stockbridge and 370 in Corus Tubes in the UK and the Netherlands and 375 at downstream rolling and finishing plants in Teesside and Scotland.

Experts believe that Europe is showing no signs of revival and this would continue to impact Tata Steel's consolidated numbers in the current quarter.

Tata Steel India on the other hand witnessed 23% rise in its turnover to Rs 24,316 crore on the backdrop of healthy domestic demand.

"In the current financial year, Tata Steel targets to sell 25-30% more against last year," said managing director B Muthuraman.

Meanwhile, Tata Steel has signed a share purchase agreement with Ryerson Holding (India) Pte Ltd to acquire the entire equity interest of Ryerson in Tata Ryerson Ltd, a 50:50 joint venture between the two companies, for a consideration of $49 million.

Tata Steel reported a dip of 60% in its net profit to Rs 4,849.24 crore for the year ended March 31, 2009, against Rs 12,349.9 crore in the previous year. Net sales stood at Rs 1,45,686 crore as against Rs 1,31,091 crore in FY08.

Slowdown pangs

Tata Steel posted a dip of about 60% in its consolidated net profit in FY09

Steel deliveries & liquid steel output of Corus fell by 14% and 20%

Production cut in Corus in June quarter was around 47%

Experts believe that Europe is showing no signs of revival

This will continue to impact Tata Steel's consolidated numbers

Corus has identified 2,045 jobs being at risk