Aided by record deliveries and profits from its Indian operations, Tata Steel on Wednesday reported a group consolidated net profit of Rs.8,983 crore ($2.015 billion) against a loss of Rs.2,009 crore in 2009-10. The company's performance was bolstered by a significant turnaround in the financial and operating performance of European operations. Net sales were up 15 per cent at Rs.117,149 crore (Rs.101,157 crore).
The board of directors has recommended a dividend of Rs.12.
The company reported an operating profit of Rs.17,103 crore for the full year, up 83 per cent over the previous year's figure of Rs.9,340 crore. The Indian operations' net profit of Rs.6,866 crore (Rs.5,046 crore) and the operating profit of Rs.12,225 crore were the highest ever on the back of higher volumes, improved product-mix and higher realisations. Standalone net sales were up 24 per cent at Rs.29,073 crore (Rs.24,717 crore). The company's European operations recorded robust improvement, posting an operating profit of Rs.4,204 crore, an increase of Rs.5,555 crore over the loss in the previous year. Higher sales and realisations along with cost-cutting measures, initiated in the aftermath of the financial crisis, lay behind this performance. However, the long products business continues to face significant challenges and the company accordingly announced restructuring initiatives earlier this month.
The company announced the sale of Teesside Cast Products (a slab manufacturing facility mothballed in February 2010) and this was completed in March 2011 in a deal valuing the business at Rs.2,091 crore ($469 million).
According Koushik Chatterjee, CFO, Tata Steel, the net debt at the end of March 2011 at Rs.46,632 crore ($10.46 billion) fell from Rs.52,836 crore ($11.85 billion) at the end of the previous quarter. The 2.9 million tonne brownfield expansion in Jamshedpur is progressing on schedule and the company has also begun site work on its greenfield project in Orissa.
According to Tata Steel Managing Director H. M. Nerurkar, “The Indian operations registered a 36 per cent increase in annual profits because of favourable market conditions and the untiring efforts of employees to exceed targets. We enjoy an excellent position in India compared to our global peers to counter cost pressures, given the growing domestic market, a higher proportion of value-added products and a sizable increase in capacity by the end of the financial year. The Orissa project is gaining momentum and its first phase is expected to be commissioned by the end of 2014. The Southeast Asian operations focused on tackling a challenging business environment and are now better placed to take advantage of improving market conditions.''
Tata Steel Europe Managing Director and CEO Karl-Ulrich Kohler said: “Our encouraging fourth-quarter performance consolidated the turnaround in the European operations achieved during the year. Higher selling prices and deliveries gave us a particularly strong end to the quarter, with additional one-off financial benefits from items such as the completion of the Teesside Cast Products sale.
“Our strategy, founded on four building blocks of market differentiation, technical innovation, cost leadership and operational excellence, is starting to deliver early successes as we focus on customer relationships. The measures announced last week in long products show our determination to complete the turnaround task and create a very competitive business that delivers robust performance in all market conditions.''