Steel major Tata Steel today reported a consolidated profit growth of 22 per cent for the quarter to September at Rs 1,528.7 crore, propped up majorly by sale of investments worth Rs 2,800 crore and higher sales in the auto and value added products category.
Other income stood at Rs 2,938.2 crore for the quarter, significantly higher compared to Rs 321.5 crore in year-ago period, which included a gain of Rs 2,808.29 crore on sale of investments, group finance director Koushik Chatterjee told reporters here.
"Our consolidated performance has been impacted by weak economic environment, relative currency movements and a surge in imports in key geographies such as Britain, India and Europe. In these challenging times, we have continued our efforts to strengthen our operations, widen and deepen the marketing franchise and manage the balance sheet effectively," Chatterjee said.
However, consolidated revenue declined 18 per cent y-o-y to Rs 29,305 crore as against analysts expectation of Rs 28,504 crore. Consolidated EBITDA came in at Rs 1,705, down 54 per cent annually, and well below analysts expectations of Rs 2,632 crore," Angel Broking Research analyst Rahul Dholam said in a note.
The domestic operations were better than analysts' expectations but European operations were disappointing due to sharp deterioration in market conditions, especially in Britain which reported an EBITDA loss during the quarter.
The Tata Steel counter closed over 4.3 per cent at 225.60 on the BSE, whose main gague Sensex was down over 0.9 per cent.
The domestic business has done well operationally but continues to bear the brunt of declining global steel realisations, weak domestic demand, a relatively strong currency and significant regulatory charges especially on our mining activity in Jharkhand, Chatterjee said.
Tata Steel Europe head Karl-Ulrich Kohler said, "our operations have turned negative this year, reflecting huge challenges the global steel industry. In Britain these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness.
"We've made three restructurings in Britian alone since July leading to reduced volumes and costs. We are working with the British government to urgently secure a more competitive trade and regulatory environment and we will support our employees affected by restructuring," Kohler said.
