Tata Steel posts quarterly loss, revival uncertain

MUMBAI Fri Nov 9, 2012 11:21pm IST

1 of 2. A labourer works at a Tata steel iron godown in Chandigarh November 9, 2012.

Credit: Reuters/Ajay Verma

Related Topics

Stocks

   

MUMBAI (Reuters) - Tata Steel (TISC.NS) does not expect an improvement any time soon to weak market conditions that sent it to a surprise quarterly loss, the company said on Friday.

The $500-billion-a-year steel industry has slowed sharply this year as moderation in China's economic growth has compounded weak demand in Europe. European operations account for nearly two thirds of Tata's 28 million tonne capacity.

Squeezed margins in Europe sent Tata to a net loss of 3.64 billion rupees for the second quarter of its financial year, against a 6 billion rupee profit last year.

"European steel demand and prices have weakened since spring and this took its toll on our financial performance," Tata Steel's head of European operations Karl-Ulrich Koehler said, adding that he didn't expect the situation to improve this year.

The average forecast in a Reuters poll of brokerages was for net profit of 2.6 billion rupees on net sales of 312.2 billion. Tata's net sales rose 4 percent to 341.3 billion rupees.

ArcelorMittal (ISPA.AS), the world's largest steelmaker, last week reported a quarterly loss. On Friday Japan's Nippon Steel & Sumitomo Metal Corp (5401.T) said that profit in the second half of 2012/13 would fall by more than 50 percent from the previous year.

INDIA OPERATIONS

Sales at Tata's Indian operations rose 11 percent to 90.3 billion rupees as demand remained steady from the consumer goods and construction sectors. Tata focuses on marketing branded products in India and generates better prices than its peers.

Tata Steel India reported net profit of 13.51 billion rupees, down from 14.95 billion a year ago. It expects to sell an additional 1 million tonnes in India this fiscal year.

The company raised capacity at its Indian plant to 9.7 million tonnes this year meet strong demand. It is also building another steel plant with capacity of 3 million tonnes at Odisha. The long-delayed project is expected to be finished in 2014.

The company held net debt of $10.4 billion at September 30, up from $9.7 billion at June 30. Tata recently tied up plans for a further $6.5 billion of borrowing for the Odisha project.

Managing Director Hemant Nerurkar said that Tata had replied to a 60 billion rupee penalty notice from the state of Odisha for illegal mining and expects to resolve the issue.

Shares in Tata Steel, valued at $7.2 billion, were down 3.3 percent by the close. The stock is up 16 percent so far in 2012, lagging a nearly 22 percent rise in the Sensex.

(Reporting by Prashant Mehra; Editing by David Goodman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Healthcare Corruption

REUTERS SHOWCASE

Deal Talk

Deal Talk

Exclusive - Lupin, U.S. firms weigh bids for GSK's mature drugs: sources  Full Article 

Relief For Sahara

Relief For Sahara

Supreme Court could allow Sahara boss to conduct asset sale talks, company says.  Full Article 

Classifying Banks

Classifying Banks

RBI to start announcing too-big-to-fail banks in Aug 2015  Full Article 

Food Scandal

Food Scandal

Starbucks, Burger King dragged in as China food scandal spreads.  Full Article 

Bigger iPhones

Bigger iPhones

Apple asks suppliers to produce up to 80 mln large-screen iPhones - WSJ.  Full Article 

Wholesale Biz

Wholesale Biz

Wal-Mart adds $102.9 million in Indian wholesale business in June.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage