Tata Steel Q1 profit falls 70% to Rs337.33 crore

Tata Steel Ltd, India's largest sector steel maker, reported a 70-per cent fall in consolidated net profit for the three months ended 30 June 2014, from a year earlier, due mainly to high costs. Net profit, including those of its units, dropped to Rs337.33 crore in April-June 2014-15 from Rs1,139.01 crore in the year before quarter.

Net profit for the quarter came in at Rs337 crore affected by exceptional charges of Rs262 crore, Tata Steel said in a release.

Group operating earnings before interest, taxes, depreciation and amortisation (EBIDTA) improved across all regions as group EBITDA for the first quarter ended 30 June 2014 rose to Rs4,325 crore from Rs3,755 crore the year before.

Net sales of the company rose 11 per cent to Rs36,143.27 crore from a year ago

''Had the company recognised changes in actuarial valuations of pension plans of Tata Steel Europe in the statement of profit and loss, the consolidated profit after taxes, minority interest and share of profit of associates for the quarter ended 30 June 2014 would have been lower by Rs452.46 crore and the consolidated profit after taxes, minority interest and share of profit of associates for the quarter ended 30 June 2013 would have been higher by Rs854.99 crore,'' the company said in a note to investors.

Tata Steel said its Indian operations continued to perform strongly and improved over the previous year on all parameters.

Hot metal and crude steel production reached 2.53 million tonnes and 2.33 million tonnes, respectively in Q1 FY'15 while saleable steel production increased to 2.25 million tonnes.

The cold-rolling mill (CRM) and new bar mill achieved best ever quarterly production. The new CGL and CAPL lines have started commercial operations while the coke oven battery was fully ramped up during the quarter.

Profit after tax in Q1 FY'15 was Rs2,268 crore compared to Rs1,356 crore in Q1 FY'14. Profits included exceptional gains of Rs788 crore from the sale of the stake in The Dhamra Port Company Limited.

EBITDA for the quarter was Rs3,266 crore, 13 per cent higher compared to Rs2,897 crore in Q1 FY'14. EBITDA margin improved by 56 basis points compared to the previous year.

Turnover in Q1 FY'15 increased by 11 per cent to Rs10,468 crore from Rs9,455 crore in Q1 FY'14. This improvement was driven by higher volumes and better realisation.

T V Narendran, managing director of Tata Steel India and South East Asia, said, ''The economic sentiment has improved in India after the general elections and the new government has been clearly communicating its intentions to bring the economy back to the growth path. Government's thrust on development of core industries like housing and infrastructure should boost steel demand in the coming quarters. We continue to grow our delivery volumes with enrichment of the overall product mix.''

In Europe, Tata Steel said its turnover in Q1 FY'15 was Rs20,741 crore compared to Rs18,432 crore in Q1 FY'14. EBITDA increased by 28 per cent to Rs995 crore from Rs777 crore in Q1 FY'14 while the EBITDA margin improved by 58 basis points. Q1 FY'15 EBIT improved to Rs136 crore versus Rs12 crore in Q1 FY'14.

Dr Karl-Ulrich Kohler, MD & CEO of Tata Steel in Europe, said, ''European steel demand is moving in the right direction. Though demand remains well below levels we would regard as healthy, we can see greater stability emerging in the markets we serve. Our quarterly financial performance improved slightly, despite market spreads tightening compared to the previous year. This would not have happened without the work we

In Southeast Asia, deliveries increased at NatSteel while the operations in Thailand reported steady performance despite continued weak market conditions.

Turnover in Q1 FY'15 was Rs4,045 crore against Rs3,908 crore in Q1 FY'14. This increase was primarily a result of higher volumes offset by a decline in steel prices.

EBITDA for Q1 FY'15 was Rs30 crore, lower than the Rs93 crore in Q1 FY'14, due to a severe price-cost squeeze, especially for the NatSteel operations, Tat Steel said.