Tata Steel on wednesday posted a net profit of ₹513 crore on a consolidated basis for the quarter ended December 31, missing consensus street estimates of ₹1,688 crore, driven by demand from the domestic market.
The company had posted a net loss of ₹2,224 crore for the comparable year-ago period. It The had posted a net loss of ₹6,196 crore for the preceding quarter ended September 30, impacted by weak performance of its European operations.
For the reporting quarter, Tata Steel’s revenue fell 3.1% to ₹55,312 crore from ₹57,084 crore recorded during the comparable year-ago period, while Ebitda rose 54.7% to ₹6,264 crore from ₹4,048 crore, the company said in a regulatory update.
The steel manufacturer also missed analysts’ estimates on revenue. A consensus estimate of Bloomberg analysts was expecting the firm to post a consolidated net profit of ₹1,688 crore on revenues of ₹57,811 crore and Ebitda of ₹5,526 crore. “Global operating environment has been complex, with economic slowdown in China and geopolitics weighing on commodity prices in general.
During this quarter, China has exported about 7-8 million tonne of steel every month, which is the highest since 2015 and this has adversely impacted global steel prices and profitability,” Tata Steel CEO and MD TV Narendran said. “Despite this, Tata Steel India has delivered better margins aided by higher deliveries and realisations on a quarter-on-quarter basis,” he added.
For the quarter, the company’s domestic deliveries at 4.78 million tonne, a 3% rise on a QoQ and 10% rise on a YoY basis. India revenues stood at ₹35,011 crore, broadly stable on QoQ basis. The firm’s cashflow from Indian operations rose to ₹9,016 crore, while consolidated cash flow from operations was lower at ₹7,879 crore.
The company’s net debt stood at ₹77,405 crore. The consistent growth in India deliveries was aided by crude steel production, which was close to 5 million tonne across the quarters in this financial year. Its deliveries in the Netherlands were up, while the UK moved lower QoQ due to subdued demand and operational issues.
According to Tata Steel CFO Koushik Chatterjee, “The UK business continues to face production shortfalls arising from the end-of-life condition of several of its heavy end assets”. Last week, Tata Steel announced plans to close two blast furnaces and coke ovens at its Port Talbot plant in the UK this year, a move that could result in potential job losses of 2,800 employees.
“Our announcement on January 19 in relation to Tata Steel UK follows detailed discussions with and careful consideration of the alternative proposal from the representative body of the UK trade unions and their advisor. The company’s analysis shows that partial continuity of blast furnaces until completion of transition to the Electric Arc Furnaces (EAF) is not affordable and engineering studies have found that building the EAF in an already operating steel melt shop is not feasible,” Chatterjee added.