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Informist, Wednesday, Jul 31, 2024

 

By Rajesh Gajra

 

MUMBAI – Subdued domestic and global prices of steel because of weak demand across India and other regions during the quarter ended June left its mark on Tata Steel Ltd's earnings. The company's consolidated revenue declined 6.7% on quarter and 7.9% on year to 547.71 bln rupees. "During the quarter, subdued steel demand across most regions weighed on global steel prices," the company's Managing Director and Chief Executive Officer T.V. Narendran said in a post-earnings note.

 

Despite this, the steel demand in India was "broadly stable", Narendran said. Tata Steel's India delivery volume of crude steel declined sequentially by 8.9% and increased 3.1% on year to 4.94 mln tn. The company's volume in the Netherlands increased 3% on quarter and 10.9% on year. Narendran said production in the Netherlands fared well "upon return to normal operating levels." In the UK, Tata Steel's volume was flat sequentially and down 8% on year.

 

Tata Steel's consolidated net profit rose almost 57% on quarter and 51.4% on year to 9.6 bln rupees in the June quarter. But adjusted for one-off losses, the company's consolidated profit after tax was up 11.1% on quarter and 149% on year at 12.77 bln rupees, according to data from the company's investor presentation on the earnings.

 

The company missed Street estimates of both, revenue and bottomline.

 

Tata Steel's standalone revenue, pre-dominantly from India operations, fell nearly 10% on quarter to 329.60 bln rupees, mainly due to lower volumes. Its revenue from Netherlands was up 1.9% at 141.67 bln rupees on higher steel sales but were partly offset by decline in non-steel sales. Tata Steel UK revenue was nearly flat at 68.10 bln rupees compared to the previous quarter.

 

In its investor presentation, the company said that the consolidated earnings before interest, tax, depreciation, and amortisation in Apr-Jun was "driven by slightly higher realisations in India partly offset by drop in UK," apart from lower sales volume. The consolidated EBITDA, adjusted for changes on account of foreign currency movement on intercompany debt and receivables, declined 0.3% sequentially to 69.50 bln rupees. Higher raw material costs at Netherlands operations weighted on the company's profitability.

 

The adjusted EBITDA per tonne increased by 7.7% on quarter to 9,407 rupees.

 

The total raw material costs, including material consumed and purchases of finished and semi-finished products, in the June quarter were up nearly 3% on quarter at 249.93 bln rupees. The company's profitability was aided by a 3.4% sequential decline in other expenses to 191.87 bln rupees.

 

Tata Steel incurred one-time cost of 3.58 bln rupees in Apr-Jun as against one-off cost of 5.94 bln rupees in the previous quarter. The one-time cost in the June quarter primarily related to payment towards electoral fund in India and increase in redundancy provision at Tata Steel UK, the company stated in its investor presentation.

 

Finance costs declined 3.6% sequentially to 17.76 bln rupees. The company's net debt rose to 821.62 bln rupees as on Jun 30 from 775.50 bln rupees as on Mar 31.

 

Tata Steel spent 37.77 bln rupees on capital expenditure during the June quarter. The company said that the phased commissioning of the 5 mln tn per annum capacity expansion at Kalinganagar was moving ahead and a blast furnace was expected to be fired up in September.

 

Today, shares of Tata Steel ended 0.8% higher at 165.33 rupees on the National Stock Exchange.  End

 

Edited by Manisha Baxla and Ashish Shirke

 

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