Despite posting a profit of Rs 466 crore during the Q3 FY09 on stand alone basis, Tata Steel Ltd, the world?s sixth largest steel producer, is expected to report a loss of approximately Rs 1,200 crore in its consolidated third quarter results of the current financial year, say experts. Tata Steel will announce its consolidated results on Friday.

Experts believe that the impact of steep correction in the steel prices and production cuts of 30% announced by Corus due to sluggish demand would reflect in the second half of FY2009 performance.

?Corus? realisations are falling steeply. Also, the demand and price outlook remain challenging at least for the next two to three quarters,? said a Mumbai-based analyst on the condition of anonymity.

Likewise, JP Morgan in its report had earlier said, ?Given the outlook of weak steel prices in Europe and higher cost of steel inventory, with Corus? focus on de-stocking its inventory, we expect Corus to post weak earnings over the next two-three quarters.?

Tata Steel shares on Thursday were marginally up by 0.52% to close at Rs 163.20 on the Bombay Stock Exchange.

Meanwhile, Tata Steel?s Thailand-based unit in January had reported its biggest quarterly loss on standalone basis since 2003. Tata Steel (Thailand) reported a consolidated net loss of 2.26 billion baht (Rs 320 crore) in Q3 December 2008 compared with a profit of 616.56 million baht (Rs 86 crore) in Q3 December 2007. Tata Steel holds 67.90% in the Thailand unit.

Tata Steel on a standalone basis also had for the first time in almost three years reported de-growth in its quarterly profits as slowing economic growth and the credit crunch significantly impacted the automotive sector. It had reported a dip of 56.36% in its net profit to Rs 466.24 crore in Q3 FY09 against Rs 1,068.58 crore in the corresponding quarter last year.

Corus, in January 2009, announced a series of strategic measures that will improve its competitive position. The initiative focuses on three areas: divestments, asset restructuring and a company-wide efficiency and overhead review. These initiatives are expected to bring annual improvements in operating profit of more than ?200 million, the company said. Also, it will also put around 3,500 jobs at risk on the company as a whole.

Experts believe, these cost saving measures would mitigate the beating to some extent but the falling steel prices due to pressure on demand will significantly impact on the company?s margins.

?There is lesser visibility on the measures announced by Corus especially as to how they would achieve their targets. The real impact would come in FY2010,? say experts.

Tough times

•Consolidated net loss expected to be Rs 1,200 cr

• Steep correction in steel prices, sluggish demand to impact Corus margins

• Tata Steel (Thailand) consolidated net loss at Rs 320 cr

• Tata Steel on a stand alone basis reported a de-growth of 56%