Tata Steel posts unexpected profit, shares jump

Tata Steel posts unexpected profit, shares jump
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First Published: Fri, Feb 27 2009. 04 31 PM IST
Updated: Fri, Feb 27 2009. 04 31 PM IST
Mumbai: Tata Steel Ltd, the world’s sixth-largest steel maker, posted a consolidated quarterly profit on Friday, beating forecasts of a loss and lifting its shares in a weak market.
Steelmakers around the world have seen sales and prices fall as the credit crisis and economic slump hits demand from major steel consuming sectors such as automotives, consumer goods and construction.
Tata Steel said its December quarter consolidated net profit after minority interest and share of profit of associates, including for its European unit Corus, fell 39% to Rs814 crore ($160 million) from a restated Rs1,325 crore a year earlier.
It said the net profit would have been lower by Rs4,256 had it followed its earlier accounting practice instead of recording actuarial gains and losses on employee benefit funds in reserves and surplus.
“Prime facie it looks like inventory loss is much lower than expected. We need to analyse the numbers further,” said VK Sharma, head of research at Anagram Stock Broking.
Consolidated net sales for October-December rose to Rs33,191 crore from Rs31,899 crore reported a year earlier.
A Reuters poll of five brokerages had forecast a net loss of Rs910 crore, on net sales of Rs22,490 crore.
Posco Warning
Global steel production tumbled 24% in the last quarter of 2008, and steel prices have dropped up to 70% since mid-2008.
South Korea’s Posco warned on Friday it might have to extend its production cut to 30% if market conditions continued to worsen.
Last month, Tata Steel’s October-December net profit from its Indian operation more than halved.
Shares in Tata Steel ended up 5.6% at Rs172.35 in a Mumbai market that fell 0.7%. The stock shed nearly half its value in October-December compared with a 25% fall in the benchmark index.
Corus, Europe’s second biggest steel maker, has announced several restructuring measures and hived off non-core assets as it battles the downturn.
Last month, it announced 3,500 job cuts worldwide, mostly in Britain, and sought support from the UK and Dutch governments to part-fund temporary cuts in work hours.
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First Published: Fri, Feb 27 2009. 04 31 PM IST
More Topics: Tata Steel | Profit | Corus | Recession | Shares |