Tata Steel has posted a 91.84% fall in consolidated net profit to Rs 634 crore for the first quarter ended June, impacted by weak European operations, but was much ahead of analysts’ estimates of the company posting a net loss.
The steel major had posted a net profit of Rs 7,764.96 crore for the comparable year-ago period.
During the quarter under review, the Tata Group firm’s consolidated revenue from operations fell 6.21% to Rs 59,490 crore from Rs 63,430 crore recorded in the year-ago quarter.
A consensus estimate of Bloomberg analysts was expecting the firm to post a consolidated net loss of Rs 122 crore on revenues of Rs 56,338 crore, and Ebitda of Rs 5,050 crore.
The profitability was affected by non-cash deferred tax charge on account of a buy-in transaction at British Steel Pension Scheme (BSPS). With this, the insurance buy-in of BSPS has been completed, de-risking Tata Steel UK, the company said in a statement.
Tata Steel’s Ebitda more than halved to `6,122 crore from `15,047 crore, while its adjusted Ebitda fell to `6,238 crore from `14,348 crore recorded in the year-ago quarter.
Tata Steel’s Europe revenue was down by 17.82% at `21,335 crore (`25,961 crore) on an Ebitda loss of `1,560 crore, compared with an Ebitda profit of `6,037 crore in the comparable year-ago quarter. The company’s turnover from its India operations — including Tata Steel and Tata Steel Long Products — rose by 2.6% to `34,901 crore (from `34,015 crore), while net profit fell 31% to `4,017 crore.
Tata Steel CEO & MD TV Narendran said: “During the quarter, global economic recovery continued to face headwinds affecting commodity prices including steel. In India, domestic steel demand continued to grow and was up around 10% on a y-o-y basis but steel spot prices moderated in line with global cues. Tata Steel delivered steady performance, with India crude steel production of around 5 million tonne.”
He said domestic deliveries were up 20% and grew at a faster pace than India’s apparent steel consumption. “We saw strong growth in key segments such as branded products, retail and industrial products and projects, which grew by 37% and 24%, respectively, on a y-o-y basis,” he added.
The company’s India crude steel production was at about 5 million tonne, up 2% y-o-y, primarily driven by ramp up at Neelachal Ispat Nigam. Deliveries were up 18% on y-o-y basis at 4.8 million tonne, driven by a rise in domestic deliveries. It had a net debt of `71,397 crore.
Tata Steel ED & CFO Koushik Chatterjee said: “In Europe, margins were broadly similar on a q-o-q basis as rise in revenue per tonne was offset by lower volumes and elevated input costs. In the UK, the buy-in transaction for the residual liabilities of British Steel Pension Scheme has been completed, successfully de-risking Tata Steel UK”.
Volatility in steel markets impacted working capital and cash flows, he said, “but we continue to commit to growth in India and spent `4,089 crore on capital expenditure during the quarter”, he added.
Narendran re-appointed CEO & MD
Tata Steel has re-appointed TV Narendran as CEO & MD for five years, effective September 19, 2023. His present tenure as CEO & MD will end on September 18. The re-appointment is subject to shareholders’ approval.
Narendran joined Tata Steel in 1988, and was appointed as MD of Tata Steel for India and South East Asia on November 1, 2013. In October 2017, the company elevated him as global CEO & MD. He is also the chairman of Tata Steel Europe, and is on the supervisory board of Tata Steel Nederland BV, Tata Steel Long Products and Neelachal Ispat Nigam.