Tata Steel Q2 profit rises 37% to Rs1,254 cr on one-time gains

Tata Steel today reported a 37 per cent rise in consolidated net profit at Rs1,254.33 crore for the July-September quarter, mainly on account of proceeds from land sale worth Rs1,146.86 crore.

Profits for Q2 FY'15 included exceptional gains of Rs1,147 crore from the sale of land at Borivali, near Mumbai, Tata Steel stated in a release.

Turnover for Q2 FY'15 increased by 9 per cent to Rs10,785 crore from Rs9,921 crore in Q2 FY'14. This improvement was driven by higher volumes and realisations and better product mix.

Tata Steel board had last March announced the result of the property auction in which Oberoi Realty had emerged the highest bidder with their final bid of Rs1,155 crore. However, the conclusion of the deal took time because of delay in obtaining requisite clearances.

Tata Steel, the world's 11th largest steelmaker had reported a net profit of Rs916.77 crore in the corresponding quarter of the previous fiscal.

The profit of the company before exceptional item and tax stood at Rs1,302 crore during the quarter against Rs1,398 crore in the year-ago quarter.

Tata Steel's total income for the second quarter of 2014-15 declined to Rs35,777 crore, from Rs36,645 crore a year earlier. Expenses also fell to Rs33,564 crore from Rs34,384 crore a year earlier.

Total tax expenses of the company, however, rose to Rs1,175 crore from Rs447 crore a year earlier.

For the first half of the fiscal (April-September 2014-15) Tata Steel's profit after tax stood at Rs4,744 crore compared to Rs2,915 crore in H1 FY'14.

Turnover in H1 FY'15 was Rs21,253 crore compared to Rs19,376 crore in H1 FY'14.

H1 FY'15 EBITDA increased to Rs6,462 crore from Rs6,099 crore in H1 FY'14. Q2 FY'15 EBITDA was stable at Rs3,196 crore compared to Rs3,202 crore in Q2 FY'14

Tata Steel said its Indian operations reported stable performance despite the weaker monsoon period. The pellet plant, merchant mill, new bar mill and cold rolling mill (CRM) achieved best ever H1 production.

Sales of automotive and special products increased by 30 per cent over last year while deliveries to the high-end segment were up by 38 per cent year-on-year. Sales of branded products, retail and solutions segment increased by 7 per cent over the last year while retail sales were up by 14 per cent over the same period.

Hot metal and crude steel production reached 2.58 million tonnes and 2.27 million tonnes respectively in Q2 FY'15 while saleable steel production increased to 2.2 million tonnes.

Deliveries in H1 FY'15 increased to 4.21 million tonnes versus 4.04 million tonnes in H1 FY'14.

European operations maintained the level of year-on-year improvement in financial performance established in the first quarter. Production and deliveries were higher than in the first quarter, despite extended summer shutdowns.

The shutdowns were used for equipment maintenance and upgrades in support of the company's customer focus strategy. In the most notable upgrade the power drives on a section of the Port Talbot hot strip mill, which rolls sheet steel, were greatly strengthened. The mill now has a stronger platform on which to pursue more differentiated product launches.

Profitability dipped slightly on the back of this necessary work, but progress on enhancing the product portfolio continued apace. The higher proportion of differentiated products in total sales has been maintained and 18 new products have been launched so far this year. These launches are enabling the company increasingly to take leadership positions in key areas of the markets it serves.

''We will remain focused on meeting growing demand for advanced high-value steels as we combat the twin challenges of sluggish European economic growth and rising imports,'' the company said.

Liquid steel production in H1 FY'15 was stable at 7.52 million tonnes versus 7.6 million tonnes in H1 FY'14. Q2 FY'15 production was virtually unchanged at 3.82 million tonnes.

Tata Steel's South East Asian operations were under pressure due to a surge in low priced imports and a decline in the rebar-scrap spread. Deliveries increased at NatSteel over the last year while declining in Thailand due to continued political uncertainty, the company said.