Tata Steel consolidated profit at Rs472 cr

Tata Steel consolidated profit at Rs472 cr
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First Published: Tue, Feb 16 2010. 10 08 PM IST
Updated: Tue, Feb 16 2010. 10 08 PM IST
Mumbai: Tata Steel Ltd, the world’s No. 8 steel maker, posted a consolidated quarterly profit and said reviving global demand would further boost earnings in the three months ending March.
Activity at Corus, Europe’s second largest steel maker, which contributes two-thirds of Tata Steel’s total capacity of 30 million tonnes (mt), has started to pick up as inventories have been run down around the world after struggling in the wake of the global downturn.
“There have been no negative surprises. Going forward, the company should see benefits from its restructuring programmes and higher steel prices,” said Pawan Burde, vice-president at PINC Research. “But we have to wait and watch how the Europe operations pan out.”
Tata Steel has been trying to cut costs by rationalizing operations in Europe and reworking interest costs.
Capacity utilization in Europe was at 83% in the December quarter, up from 74% in July-September, and is expected to be around 80% for the current quarter, excluding the firm’s Teesside operations that will be mothballed by the end of this week.
The Teesside plant in the UK had hurt the firm’s results by $222 million (around Rs1,025 crore) in the first nine months of the current fiscal, Tata Steel said on Tuesday.
As economies improve and steel stocks are run down, steel demand is forecast to rise around 10% this year. Global steel output had fallen 8% in 2009.
Earlier this month, ArcelorMittal, the world’s top steel maker, returned to a profit after three consecutive quarterly losses and said it expected higher shipments but lower prices in early 2010.
“We are finally coming out of recession in Europe but growth rates are barely 1-2%,” said Kirby Adams, Tata Steel’s head of European operations. “We expect developing economies to grow strong, but in the developed world, growth is likely to be constrained.”
The company said it had gross debt of $12.9 billion at the end of December, and cash of $1.8 billion with another $1 billion available through lines of credit.
Tata Steel reported a net profit of Rs472 crore in the December quarter, compared with a consolidated net profit after minority interest and share of profit of associates of Rs814 crore reported a year ago.
Consolidated net sales for October-December fell to Rs26,069 crore from Rs32,515 crore reported a year earlier.
Consolidated operating margins were at 13% in the December quarter versus 9% a year earlier.
Last month, Tata Steel reported a stand-alone quarterly profit for India operations, which more than doubled to Rs1,192 crore on strong demand from the auto and construction sectors.
Shares of Tata Steel rose 2.2% to Rs549.85 ahead of the results on the Bombay Stock Exchange that gained 1.2% on Tuesday.
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First Published: Tue, Feb 16 2010. 10 08 PM IST