Tata Steel Q3 loss widens to Rs 763 crore on weak Euro market

KOLKATA: Tata Steel group posted a higher consolidated net loss of Rs 763 crore for the third quarter ending December 2012 on the back of weak steel demand in Europe against a loss of Rs 603 crore in the same period last year. The group turnover in the quarter under review also went down to Rs 32,107 crore in Q3FY13 against Rs 33,103 crore in the Q3FY12.

In nine month period ending December 2012, Tata Steel posted a consolidated loss of Rs 529 crore against a profit of Rs 4956 crore in the previous corresponding period. This included one-off gains from sale of investments (Rs 3,362 crore) and Rs 685 from Teesside Cast Products arbitration settlement.
Group consolidated turnover stood at Rs 100, 061 crore in nine month period of FY13 against Rs 98,901 crore in previous comparable period. Karl-Ulrich Kohler MD & CEO of Tata Steel in Europe said: “Sliding demand was a key problem for European steelmakers in 2012 and this was reflected in our December quarter deliveries.”

At group level, steel deliveries remained stagnant at 5.83 million tonne (mt) in Q3FY13 compared to 5.84 mt in Q3FY12. The results disappointed the markets with the Tata Steel scrip going down 2.18% to Rs 376.15 on the BSE on Tuesday.

A sluggish steel market at home saw Tata Steel’s Indian operations report a 26.3% drop in net profit to Rs 1046 crore in Q3FY13 compared to a net of Rs 1421 crore in Q3FY12. In the nine month period ending December 2012, net profit went down 27% to Rs 3754 crore against Rs 5136 crore in the same period last year.

Turnover went up to Rs 27,429 crore in nine months ending December 2012 against Rs 24,454 crore in previous comparable period. “The Indian operations performed steadily despite the overall weak steel demand in India. Our ability to achieve sequential volume growth in a difficult market reaffirms the strength of our distribution channels and customer orientation strategy.

Government reform action and lower interest rates should help boost steel demand,” Tata Steel managing director H M Nerurkar said. Steel deliveries in India went up to 1.9 mt in Q3FY13 against 1.62 mt in Q3FY12.

Commenting on Tata Steel results, Bhavesh Chauhan senior research analyst, Angel Broking said: “Tata Steel posted disappointing results with both sales and net profit below our expectations. In its India operations, PAT came in at Rs 1,046 crore compared to our estimate of Rs 1,400 crore.

European operations posted a loss of US$78 at EBITDA level. Nevertheless, we expect higher volumes to come from its profitable India operations during FY14-15.”