Tata Steel profit falls 90% to Rs 1,297 crore  | The Financial Express

Tata Steel profit falls 90% to Rs 1,297 crore 

Net sales remained almost flat, declining 0.84% y-o-y to 59,878 crore, though beating analyst expectations of Rs 56,321.50 crore.

Tata Steel profit falls 90% to Rs 1,297 crore 
Steel deliveries fell 2.16% y-o-y to 7.23 million tonne.

Tata Steel on Monday posted a 90% year-on-year decline in its consolidated net profit for the quarter ended September to Rs 1,297 crore as the demand environment softened, gross steel spreads declined globally and high energy costs hit the earnings. The company missed the Bloomberg consensus estimates of nearly Rs 3,155 crore.

Net sales remained almost flat, declining 0.84% y-o-y to 59,878 crore, though beating analyst expectations of Rs 56,321.50 crore. Revenues were impacted due to a drop in realisations across geographies and lower volumes in Europe. Steel deliveries fell 2.16% y-o-y to 7.23 million tonne. Revenues were flat y-o-y at 34,114 crore, while Ebitda stood at Rs 4,907 crore, a decline of 64% y-o-y and translating to an Ebitda per tonne of Rs 9,986.

The Tata Steel management said the company has not had discussions with the new government in the UK yet regarding the support that it seeks, and the amount that it seeks is much lower than the £3 billion quoted in some media reports. Responding to a specific query, TV Narendran, CEO & managing director, Tata Steel, told reporters over a conference call that while Tata Steel’s proposal is with the UK government and it waits to hear back, it would want a decision sooner than later.

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“We will take that call. There are obviously plans being made in case we don’t get the support that we seek. But it is too early to talk about it. There are conversations going on internally on how we plan for all situations. Whatever we do will be decided based on the response from the government.” Narendran said the request for support from the government is for the capex required to be invested, but he refrained from disclosing any amount.

Also read| Tata Steel says actively engaged with UK govt for financial support for biz

Lower volumes in Europe coinciding with consumption of high-cost inventory and coupled with a drop in realisations in India led the consolidated Ebitda to fall 62% y-o-y to Rs 6,271 crore, while the Ebitda margins contracted sharply to 10% from 27.5% on a y-o-y basis. Tata Steel’s standalone deliveries were higher by 7% y-o-y, primarily driven by record domestic deliveries.

In Europe, deliveries were lower on a sequential basis, partly due to seasonal factors and subdued demand in Europe. The turnover was £2,307 million and the Ebitda was £199 million, which translates to an Ebitda per tonne of £106. The company’s gross debt increased to 87,516 crore due to bunching up of large cash payouts of about19,000 crore in Q2 on account of Neelachal Ispat Nigam (NINL) acquisition, FY22 dividend payout of 6,000 crore and growth capex of3,200 crore. The net debt stood at Rs 71,753 crore.

Koushik Chatterjee, executive director and CFO, Tata Steel, said deleveraging is not the most important thing for the company anymore, though it is ensuring to close the current financial year at the same levels of gross debt as at the end of March 2022.

“We have overperformed on debt reduction in the last two years. However, this year we have had a big capital allocation due to the acquisition of NINL, and we are also looking at market conditions…so, we will reassess (our debt reduction target) at the end of the third quarter. But I can certainly say that the same quantum of deleveraging will not happen,” he added.

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First published on: 01-11-2022 at 07:15 IST