Tata Steel Q3 net profit down 69% at Rs157 crore
07 February 2015
Tata Steel, India's top private sector steelmaker, has reported a 69 per cent year-on-year fall in its net profit, at Rs157 crore, for the October-December quarter of the 2014-15 financial year.
Tata Steel blamed the worst performance in seven quarters on the rising cost of sourcing iron ore after a mine shutdown and rising imports of cheap steel from China.
Net income, including that of Tata Steel Europe, fell 69 per cent to Rs157 crore in the three months ended 31 December, from Rs503 crore a year earlier, Tata Steel said in a statement.
Tata Steel said its sales were adversely impacted as steel prices at the company's key markets in India and Europe fell, while its iron ore costs in India surged as it imported more raw material to fill a gap created by the closing of one if its biggest mines.
Meanwhile, China, the world's biggest producer, shipped a record more than 28 million tonnes of steel last quarter as demand at home weakened.
Tata steel had to suspend mining operations at the Joda East, Katamati, Bamebari and Joda West mines since 15 November 2014, following the stoppage order issued by the Odisha government until 16 December 2014, when the Odisha High Court directed reopening of the mines.
''The third quarter performance was affected by adverse macro headwinds in terms of declining commodity prices, increasing Chinese exports and lower demand in the Indian market.'' Koushik Chatterjee, group executive director (finance and corporate), said.
''The company also faced significant regulatory challenges in India which affected its raw material sourcing and put significant strain on its operations. However, stronger performance in the European business, various cost saving measures across geographies and robust risk management of raw material security helped the company limit the impact on its profitability,'' he added.
However, Tata Steel said its European business continued to improve its product mix with sales of differentiated products now more than a third of overall sales. This portfolio enhancement, together with lower input costs, contributed to the improved financial performance during the quarter.
During the third quarter, the group sold its 5-per cent stake in the Carborough Downs joint venture in Australia for A$6.9 million to Vale as part of its ongoing financial initiatives to strengthen the balance sheet.
Tata Steel Europe, the continent's second-largest steelmaker by sales after ArcelorMittal, is looking to sell some loss-making operations and is shifting to higher-margin speciality steel.
It said due diligence was continuing on the potential sale of its long-products business in Europe to Klesch Group.