Tata Steel Q4 Show Beats Estimates
Co posts .` 1,036-cr net on higher sales, realisations in India & Europe; to pay dividend of .` 10/share for FY14
Tata Steel reported a consolidated profit of .` 1,035.8 crore for the fourth quarter ended March 31, beating market expectations, helped by higher sales volumes and better realisations in Europe and India.
Analysts, on an average, were expecting Tata Steel to report consolidated net profit of .` 970.9 crore on sales of .` 40,791.9 crore, according to a Bloomberg poll. The company reported a loss of .` 6,529 crore during the same period last year, hurt by impairment charges.
Sales rose 23% to .` 42,017.6 crore from the same quarter last year. Sales volumes grew to 7.6 million tonnes (MT) compared with 6.6 MT during the same quarter last year.
Tata Steel board has recommended a dividend of .` 10 a share for FY14.
Earnings before interest, depreciation, tax and amortization (EBITDA) was .` 4,917 crore from .` 4,368 crore during same quarter last year. EBITDA per tonne rose in India and Europe but fell in South-East Asia.
Tata Steel Europe CEO Karl-Ulrich Köhler said that the Europe business is focussing on operating costs and will look to reduce costs through more internal measures. He acknowledged that the company continued to see pressure on margins. “Europe is suffering from overcapacity, which means pricing power is limited. Since there was a decrease in raw material prices, the benefit of which will come with a lag effect, customers asked for lower prices,” Köhler said. Global iron-ore prices have fallen sharply in the last three months, putting downward pressure on steel prices. Tata Steel Europe, known as Corus before the $13-billion buyout in 2007, accounts for more than half of Tata Steel’s total consolidated revenue. The company, which has been severely hit by recession and overcapacity, has remained operationally positive for five straight quarters, driven by several restructuring measures and a slight uptick in demand in Europe. The company indicated at more restructuring in the coming year. ArcelorMittal, the world’s largest steelmaker, showed ‘cautious optimism’ about the economic recovery in the continent about the business outlook for the rest of 2014, when it re- ported quarterly results last week.
Tata Steel is India’s largest private sector steelmaker by revenue. It has a production capacity of about 10 MT per annum in Jamshedpur and about 18 MT in Europe. The company is increasing steelmaking capacity in Kaliganagar, Odisha. The project will add about 3 MT in the first phase of expansion. Koushik Chatterjee, group executive director, said the Kaliganagar will be commissioned this year. The company has already spent .` 16,350 crore this year. However, on the impending interim order by the Supreme Court on illegal mining in Odisha, the company remained non-committal. “Each company has to be treated on merit. We are operating with all clearances. But as all good companies we have a plan B in place,” said Chatterjee. He refused to elaborate on the plan. Gross debt rose to .` 81,000 crore as on March 31, 2014 from .` 76,500 crore three months back. On refinancing of debt, Chatterjee said: “it will happen, when it has to happen. We’ll take a call when it’s due.” Shares of the company jumped to a 22month high and closed up 6% at .` 452.15 per share on BSE on Wednesday.