Tata Steel Ltd has reported an 88.8 per cent drop in its net profit to Rs 598 crore in the quarter ended June 30 against Rs 5,347 crore reported in the corresponding period last year.
The net profit for the June quarter last year was higher by Rs 3361.92 crore as the company had sold its 26.27 per cent stake in Australia’s Riversdale Mining to Rio Tinto for $1 billion. Without this exceptional item, the net profit of the June 2011 quarter would have been Rs 1,984.63 crore. Income from operations went up to Rs 33,821 crore, up marginally from Rs 33,000 crore in June 2011 quarter. Total expenses for the quarter were reported at Rs 31,726 crore against Rs 29,69 crore a year ago.
Sequentially, however, the profit went up as the company had reported a profit of just Rs 433 crore in the January-March quarter.
On a standalone basis, it reported a net profit of Rs 1,357 crore for April-June against Rs 2,219 crore a year earlier. On a sequential basis, profit dropped by Rs 204 crore.
“Market challenges have made us focus on tightening of costs, improving product-mix and ensuring that the ramp-up of our brownfield expansion takes place by the year-end,” said H M Nerurkar, managing director, Tata Steel.
Last week, international ratings agency Moody’s put a negative outlook on the company because of the weak European outlook which forms a major chunk of the Tata Steel Group. Moody’s said it had brought down the rating of Tata Steel Europe to B3 from B2 as they expected further weakening of the European market.
International subsidiaries, led by Tata Steel Europe, continue to report losses. According to the auditors’ report, the revenues of the five overseas subsidiaries which include Tata Steel Europe, NatSteel, Tata Steel Thailand, were at Rs 23,929.88 crore and made a loss after taxes, minority interest and share of profits of associates of Rs 967.85 crore.
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Tata Steel Europe reported a flat turnover at Rs 20,406 crore for the quarter, compared with Rs 20,535 crore a year ago. Sales at the European subsidiary dropped five per cent sequentially and 15 per cent from the June quarter last year.
Pure earnings of Tata Steel Europe, Ebitda (earning before interest, tax, depreciation and ammortisation), dropped to Rs 620 crore from Rs 1,907 crore in the given period. The company, however, said the Ebitda margins did improve on a sequential basis. Karl-Ulrich Köhler, managing director and chief executive officer, Tata Steel Europe, said: “Our financial performance continued to improve as raw material cost pressure eased further and strategic cost initiatives yielded further benefits.”
He further said the European steel demand was lower than expected and prices had weakened. “We continue to seek to mitigate the effects of this with tight cost control and emphasis on increased product differentiation,” he said.
Turnover of Tata Steel Southeast Asia went up by a mere 1.2 per cent in the June quarter. The Ebitda, at Rs 95 crore, was up by 6.1 per cent from the corresponding quarter last year. Nerurkar said: “Southeast Asian operations are being strengthened on the back of operational and marketing initiatives, leading to better results.”
Net debt of the group went up to Rs 54,020 crore, compared to Rs 47,657 crore at the end of March 2012.