Tata Steel reported 90% drop in consolidated net profit to Rs 1,297 crore in Q2 FY23 from Rs 12,548 crore in Q2 FY22.
Total revenue from operations fell marginally, by 1%, to Rs 59,878 crore in the second quarter as compared with the same period last year.
While the company's crude steel production declined by 3% to 7.56 million tons, deliveries contracted by 2% to 7.23 million tons in Q2 FY23 over Q2 FY22. In India, Deliveries were higher by 21% QoQ and 7% YoY primarily driven by record domestic deliveries. In Europe, however, deliveries were lower on QoQ basis, in part due to seasonal factors and subdued demand in the region.
Raw material cost rose by 41% YoY to Rs 31,246 crore during the period under review.
Adjusted EBITDA in Q2 FY23 was Rs 5,817 crore, which is lower by 67% as compared with Rs 17,810 crore in Q2 FY22. Adjusted EBITDA per ton was down 67% to Rs 8,045 from Rs 24,112 in Q2 FY22.
Profit before tax and before exceptional items was Rs 2,625 crore in Q2 FY23, down by 81% from Rs 13,604 crore in Q2 FY22. The company recorded an exceptional loss of Rs 19 crore in the second quarter as against an exceptional gain of Rs 516 crore recorded in the same period last year.
The company's net debt was Rs 71,753 crore and net debt to EBITDA was at 1.37x and net debt to equity stood at 0.63x during the period under review.
Tata Steel said that the 6 MTPA Pellet plant will be commissioned in Q3 FY23 and will be followed by the Cold Roll Mill complex in phases. The 5 MTPA expansion at Kalinganagar is on track for commissioning by end FY24. Neelachal Ispat Nigam's blast furnace was restarted in October, within 3 months of completion of the acquisition and is being ramped up.
The Tata Steel Board has approved the amalgamation proposal of seven listed and unlisted entities into Tata Steel, a value accretive merger with multiple benefits.
The company has commenced work on setting up 0.75 MTPA electric arc furnace (EAF) in Punjab, which will leverage the growth in the construction segment and would be an important milestone in its transition to net zero.
T V Narendran, chief executive officer & managing director, said: Concerns about slowdown in key economies, persisting geopolitical issues coupled with seasonal factors led to a volatile operating environment.
Despite these headwinds, Tata Steel registered best ever domestic sales in India enabled by a strong product portfolio and an extensive distribution network which services end to end requirements in chosen segments.
We will set up more EAFs in the country, which will enable capacity augmentation and along with NINL expansion, will drive growth in our high margin retail business. Our EAF expansion is an important milestone in our sustainability journey and part of the multiple initiatives we are pursuing to achieve net zero by 2045.
Koushik Chatterjee, executive director and chief financial officer, added: Globally, gross steel spreads declined amidst concerns about global recovery and elevated input costs including energy. Our consolidated EBITDA stood at Rs 6,271 crores, with Consolidated EBITDA margin of 10% and Standalone EBITDA margin of 16%.
Utilisation of high-cost inventory of raw material and steel coincided with drop in realisations to result in margin decline across geographies.
The operating environment though should gradually improve in 2HFY23 on government measures and restocking. The margins should benefit across geographies from gradual recovery in Indian markets and favourable movement in raw material prices, especially Coking coal. Energy costs in Europe continue to remain a key watchpoint.
Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 34 million tons per annum.
The scrip ended flat at Rs 101.55 on the BSE today.
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