Tata Steel Q2 profit $144 million, beats estimates

NEW DELHI Wed Nov 13, 2013 9:06pm IST

The Tata Steel logo is seen at the Tata Steel rails factory in Hayange, Eastern France, September 25, 2013. REUTERS/Vincent Kessler/Files

The Tata Steel logo is seen at the Tata Steel rails factory in Hayange, Eastern France, September 25, 2013.

Credit: Reuters/Vincent Kessler/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - Tata Steel Ltd(TISC.NS) reported a sharply higher-than-expected second-quarter profit, helped by a rise in prices and market share at home but it said Europe was still challenging despite an improving performance there.

Europe is Tata Steel's top market and production centre, but it has struggled there since gaining an entry through its $13 billion acquisition of Corus in 2007.

However, the company said its operations in the region were stabilising and production there grew sequentially some 3 percent in the three months to September 30. Quarterly operating income from the region improved to 5.54 billion rupees, compared with an operating loss of 400 million rupees a year earlier.

"The investments in our asset base are proving their worth in what continues to be a challenging market," Karl-Ulrich Köhler, chief executive of Tata Steel's European operations, said in a statement.

July-September consolidated net profit, after minority interest and share of associates, was 9.17 billion rupees, compared with a loss of 3.64 billion rupees a year earlier, Tata Steel said.

Net sales at the company, the second-largest steel producer in Europe, rose 7.4 percent to 363.7 billion rupees. Analysts had expected a profit of 3.67 billion rupees on revenue of 332.74 billion rupees, according to Thomson Reuters I/B/E/S.

European steel demand is expected to pick up slowly in the third quarter and to continue to grow as steel-using sectors recover, said the company, which is trying to cut costs and focus on high-margin products.

Tata Steel said last month it may cut about 500 jobs in the UK under plans to restructure the part of its business supplying construction and engineering industries.

Last month it won a contract to supply Britain's Network Rail with more than 95 percent of its rails for at least five years. The contract is significant for the company following a $1.6 billion writedown announced in May mainly due to weak demand in Europe.

Signs of a turnaround for Tata Steel in Europe comes after ArcelorMittal SA (ISPA.AS), the world's largest steelmaker, with 44 percent of crude steel production capacity in the region, said on November 7 a two-year slump was over and prospects for 2014 were looking up.

Tata Steel's European operations "surprised us positively with better-than-expected volumes and profitability", Bhavesh Chauhan, an analyst at Mumbai brokerage Angel Broking, said.

"STEADY" INDIA OPERATIONS

In India, Tata Steel said a weak economy may affect demand from steel-consuming sectors, although volumes were steady during the quarter despite the seasonal effects of monsoon rains and weak macroeconomic conditions.

Tata Steel has raised prices in its home market and gained market share as a weak rupee curbed imports. It said a new steel plant being built in eastern India was making "good progress".

Tata Steel's shares closed 1.5 percent higher before the results were announced, in a Mumbai market that fell 0.5 percent. The shares have risen more than 7 percent since the ArcelorMittal comments.

Indian steel stocks are the worst performers in the Asia-Pacific region so far this year, according to Thomson Reuters data. Tata Steel's net debt of 643.34 billion rupees is the highest among the six top steel companies in India. (Additional reporting by Tripti Kalro in Bangalore; editing by David Evans)

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
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Read | Full Coverage 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Insider Trading Case

Insider Trading Case

Ex-Goldman director Rajat Gupta to surrender June 17 in insider case.  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

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