Tata Steel turns to loss in December quarter on weak European demand
Tata Steel swung to an unexpected loss in its third quarter after raw material costs gained & demand waned in Europe, its largest market.
By Bloomberg |
NEW DELHI: Tata Steel Ltd, India's biggest producer, swung to an unexpected loss in its third quarter after raw material costs gained and demand waned in Europe, its largest market.
The loss, including that of unit Tata Steel Europe, was 603 crore ($122 million) in the three months ended December 31, compared with a profit of 1,000 crore a year earlier, the Mumbai-based company said on Thursday in a statement. The median profit estimate of 28 analysts in a Bloomberg survey was 257 crore. Sales gained 15% to 32,960 crore.
The debt crisis in Europe, which contributes about two- third of Tata's production, has cut steel demand and prices. Global use of the alloy will rise 4.5% in 2012, the slowest in three years, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg.
Total costs rose 22% to 32,550 crore, while raw material expenses climbed 21% to 12,620 crore in the quarter. Tata Steel earned 138 crore from sources other than its main business, the company said.
Tata Steel Europe Chief Executive Officer Karl-Ulrich Koehler in November predicted a "difficult" third quarter. The European unit, which buys all the raw material it needs from outside suppliers, faced a 17% increase in coking coal prices, compared with a 3.5% increase in the price of steel hot-rolled coils in the last quarter.
Mothballed mill
The company on December 2 said it mothballed the Llanwern hot strip mill in Newport, UK, cutting 115 jobs. The mill will remain shut until the UK economy and steel demand justify a restart, it then said.
Rival ArcelorMittal, the world's largest steel producer, reported on February 7 fourth-quarter earnings before interest, tax, depreciation and amortization fell to $1.71 billion from $1.85 billion a year earlier.
That compared with the $1.68 billion median estimate of 16 analysts surveyed by Bloomberg. First-half Ebitda is likely to exceed results in the prior six months, while still being lower than a year earlier, the company said in a statement.
Tata Steel shares gained 0.3% to 452.15. The earnings were announced after the market closed. The benchmark Sensitive Index gained 0.7%.
The loss, including that of unit Tata Steel Europe, was 603 crore ($122 million) in the three months ended December 31, compared with a profit of 1,000 crore a year earlier, the Mumbai-based company said on Thursday in a statement. The median profit estimate of 28 analysts in a Bloomberg survey was 257 crore. Sales gained 15% to 32,960 crore.
The debt crisis in Europe, which contributes about two- third of Tata's production, has cut steel demand and prices. Global use of the alloy will rise 4.5% in 2012, the slowest in three years, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg.
Total costs rose 22% to 32,550 crore, while raw material expenses climbed 21% to 12,620 crore in the quarter. Tata Steel earned 138 crore from sources other than its main business, the company said.
Tata Steel Europe Chief Executive Officer Karl-Ulrich Koehler in November predicted a "difficult" third quarter. The European unit, which buys all the raw material it needs from outside suppliers, faced a 17% increase in coking coal prices, compared with a 3.5% increase in the price of steel hot-rolled coils in the last quarter.
Mothballed mill
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The company on December 2 said it mothballed the Llanwern hot strip mill in Newport, UK, cutting 115 jobs. The mill will remain shut until the UK economy and steel demand justify a restart, it then said.
Rival ArcelorMittal, the world's largest steel producer, reported on February 7 fourth-quarter earnings before interest, tax, depreciation and amortization fell to $1.71 billion from $1.85 billion a year earlier.
That compared with the $1.68 billion median estimate of 16 analysts surveyed by Bloomberg. First-half Ebitda is likely to exceed results in the prior six months, while still being lower than a year earlier, the company said in a statement.
Tata Steel shares gained 0.3% to 452.15. The earnings were announced after the market closed. The benchmark Sensitive Index gained 0.7%.
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