Tata Steel posts ~147-bn profit in March quarter
Tata Steel on Wednesday reported a consolidated net profit of ~146.88 billion for the fourth quarter ended March. It had clocked a net loss of ~11.68 billion in the corresponding quarter of the previous financial year, it said in a BSE filing.
Tata Steel reported a consolidated net profit of ~146.88 billion for the January-March 2018 period, its highest-ever quarterly profit, aided by an exceptional gain of ~113.76 billion on account of restructuring of its UK pension scheme. Even if the exception gain is ignored, the operational performance was ahead of Street estimates, driven by strong profitability in the Indian steel operations.
The company had posted a net loss of ~11.68 billion in the corresponding quarter of 2016-17.
Net sales (including other operating revenues) during the quarter stood at ~361.32 billion, as against ~338.56 billion reported in the year-ago period. Total expenses were ~296.33 billion compared to ~268.30 billion in the same period a year ago.
Consolidated Ebitda, or earnings before interest, taxation, depreciation and amortisation, was ~65.79 billion against ~69.82 billion reported in the year-ago quarter. This was higher than Bloomberg consensus analysts’ estimates of ~58.76 billion, largely led by its India performance. Rising domestic steel prices pushed up realisations. Thus, despite lower steel sales of 3.03 million tonnes (mt) (3.21 mt in the yearago quarter), the domestic Ebitda at ~48.23 billion grew 11.5 per cent yearon-year and was higher than analysts' estimate of ~46.21 billion. As expected, production was lower at Kalinganagar facility due to outage. Domestic Ebitda per tonne, thus, increased to ~15,932, better than ~14,094 in the December 2017 quarter as well as ~13,478 in the year-ago quarter. This drove Tata Steel’s consolidated performance in the March quarter.
Tata Steel’s total production for the full financial year 2017-2018 was 25.39 mt, as against 24.52 mt in FY17, at consolidated level.
“The March quarter has been a good year for us, as the group delivered strong top and bottom line growth. During the year, our India business did very well, with industry leading Ebitda margins and strong cash flows. Europe performance is also improving with restructuring, plant upgrades and support from better pricing in the European Union,” said Koushik Chatterjee, executive director and chief financial officer at Tata Steel.
On its winning bid for Bhushan Steel, Tata Steel said the company’s capacities were operating at 3-3.2 mt and these could be ramped up to 4.5- 5 mt in the next couple of years. “We may look at expansion possibilities to take it to 8-8.5 mt after two to three years,” said TV Narendran, chief executive officer and managing director.
The company added that once the resolution process was complete, it would look at synergies between the existing and new capacities, and that it intended to take all of Bhushan Steel’s 5,000 employees on board.