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

The Economic Times - - Companies - OUR BU­REAU

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.

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