Tata Steel profit more than dou­bles in June quar­ter

The Pak Banker - - COMPANIES/BOSS -

Steel maker Tata Steel Ltd's net profit more than dou­bled in the quar­ter ended 30 June, helped by one-time ex­cep­tional gains and other in­come.

The com­pany on Tues­day re­ported a con­sol­i­dated net profit of Rs.762.96 crore, 126% higher than the Rs.337.33 crore profit re­ported a year ago. To­tal in­come fell 15% from Rs.36,643.35 crore to Rs.31,062.5 crore. In a Bloomberg poll, 16 an­a­lysts es­ti­mated sales of Rs.29,584.5 crore and 22 an­a­lysts es­ti­mated a loss Rs.555.7 crore at the con­sol­i­dated level. Other in­come for the April-June quar­ter was at Rs.762.17 crore, 253% higher than Rs.216.14 crore re­ported a year ago.

"Other in­come dur­ing the quar­ter in­cludes gains of Rs.696.79 crore from sale of quoted in­vest­ments," the com­pany said in its state­ment to BSE. The com­pany also re­ported an ex­cep­tional gain of Rs.158.43 crore for the June quar­ter. "Ex­cep­tional items at the stand-alone level in­clude profit of Rs.105.14 crore from the sale of the com­pany's stake in Tata Projects Ltd. Fur­ther, the con­sol­i­dated re­sults in­cludes profit of Rs.52.64 crore on sale of the group's stake in two of its joint ven­tures in Europe," the state­ment said.

On a stand-alone level, the com­pany re­ported a 45% drop in net profit to Rs.1,248 crore for the April-June quar­ter. The stand-alone re­sults re­flect the com­pany's In­dia oper­a­tions. To­tal in­come for the same pe­riod fell from Rs.10,611.76 crore to Rs.9,842.55 crore, a dip of 7%. For its In­dia oper­a­tions, the com­pany re­ported a 26% drop in Ebitda (earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion, and amor­ti­za­tion) to Rs.2,411 crore for the quar­ter ended June.

"The In­dian steel in­dus­try con­tin­ues to bear the brunt of a surge in im­ports and tepid do­mes­tic de­mand, which led to a sharp drop in steel prices over the quar­ter," said T.V. Naren­dran, man­ag­ing di­rec­tor of Tata Steel In­dia and South­East Asia, in the state­ment. Ebitda for its Euro­pean oper­a­tions fell 42% to Rs.575 crore. "The de­crease was largely at­trib­ut­able to the ad­verse ster­ling euro cur­rency move­ment im­pact­ing the UK oper­a­tions," the com­pany state­ment said.

"Mar­ket con­di­tions have wors­ened this year... Surg­ing im­ports con­sti­tute a threat to Euro­pean steel-mak­ing. Un­com­pet­i­tive energy costs and the strength of ster­ling are hurt­ing our UK oper­a­tions. These three fac­tors caused our first quar­ter fi­nan­cial per­for­mance to de­te­ri­o­rate, de­spite our more sta­ble pro­duc­tion plat­form as seen in our im­proved op­er­at­ing per­for­mance," said Karl-Ul­rich Köh­ler, man­ag­ing di­rec­tor and chief ex­ec­u­tive of­fi­cer, Tata Steel, Europe. Steel de­liv­er­ies from In­dia oper­a­tions in­creased to 2.14 mil­lion tonnes (mt) in the June quar­ter from 2.10 mt a year ago. For Europe, Tata Steel re­ported a 7% rise in de­liv­er­ies to 3.44 mt.

"The re­sults were in line at the op­er­at­ing level. Due to the other in­come, profit has been above es­ti­mates. We ex­pect oper­a­tions-wise things are likely to de­te­ri­o­rate fur­ther from what they were in the June quar­ter. There is the mine clo­sure im­pact also likely to show in the Septem­ber quar­ter," said a met­als an­a­lyst from a for­eign bro­ker­age firm, who did not want to be iden­ti­fied.

Tata Steel's Noa­mundi iron ore mines in Jhark­hand have stopped des­patch of iron ore as the state gov­ern­ment has dis­con­tin­ued the is­suance of chal­lans for the same. The mine caters to Tata Steel's Jamshed­pur steel plant and its clo­sure is likely to have a fi­nan­cial im­pact. In a sep­a­rate de­vel­op­ment, Tata Steel also ex­e­cuted the sale of 19.4 mil­lion shares it held in Ti­tan Co. Ltd to par­ent com­pany Tata Sons Ltd on Tues­day.

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