Tata Steel on Thursday reported a consolidated loss of Rs. 2,720 crore for the quarter ended September 30, 2009, impacted largely by a dismal performance of its European operations. The company had reported a profit of Rs. 4,703.64 crore in the same period in the previous year.
Net sales during the quarter were down 41 per cent at Rs. 25,270 crore (Rs. 44,050 crore). The operating loss was Rs 763.78 crore against a profit of Rs. 7,154.20 crore in the year-ago period. The results were largely impacted by the poor showing of its European operations through Tata Steel Europe (earlier Corus) which reported operating loss of $220 million. Tata Steel Europe’s turnover halved in the first half of 2010 to $6.7 billion from $13.7 billion in the year-ago period and steel deliveries dropped 41 per cent to 7.1 million tonnes (12 million tonnes) mainly due to lower pricing. For the half-year, Tata Steel Group reported a loss of Rs. 4,958 crore against a profit of Rs. 8,618.30 crore in the year-ago period.
Hemant Nerurkar, Managing Director, Tata Steel, said, “In the second-half of the year, in India, we will focus on higher volumes. From October 2009, we will produce higher than 6.8 million tonnes annually and imported coal prices will come down in H2 and also infrastructure spending will improve from the current month onwards. Our automobile contracts will see higher rates because they were too low in H1. We are targeting savings through improvement of $208 million for the year and are well on track to achieve that figure.”
Kirby Adams, Managing Director and CEO, Tata Steel Europe, said the global steel environment saw an unprecedented drop in demand and production in the last 12 months due to the credit crisis. “However, owing to reduction in raw material cost, higher volumes and capacity utilisation in the strips division and benefits of around $144 million from the ‘Fit for Future’ programme in the second-half, we expect a much better second-half of the year. We are already EBIDTA-positive (earnings before interest, depreciation and tax) in October and are seeing more stability in prices,” he said.
While capacity utilisation was 75 per cent in the September quarter, up from 53 per cent in the June quarter, it could be 80 per cent for the rest of the year. Mr. Adams said the operational loss at the Teesside plant (U.K.) was around Rs. 800 crore and the company was prepared to “mothball the plant if necessary.”
Tata Steel Group had a gross debt of $12.4 billion at the end of September, which it aimed to cut by $2 billion in the next 12 months, said Koushik Chatterjee, Group CFO.
“We will look to restructure the existing debt and have no material repayment obligations for the next 12 months. We will prepay $180 million before March 2010,” he said.