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

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

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:

SAARC Summit

REUTERS SHOWCASE

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters Poll

Reuters Poll

GDP growth to slow to 5.1 pct, but no rate cut yet  Full Article 

Vodafone Tax Dispute

Vodafone Tax Dispute

India advised against challenging Vodafone tax ruling - source  Full Article 

India-focused Funds

India-focused Funds

India-focused hedge funds up over 40 pct YTD - HFR  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Falling Oil Prices

Falling Oil Prices

OPEC heading for no output cut despite oil price plunge  Full Article 

RBI Rate Hopes

RBI Rate Hopes

Markets pricing in rate cut, despite wary RBI  Full Article 

Land Disputes

Land Disputes

Disputes over land for industry on the rise in India, angering locals - charities  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

Reuters India Mobile

Reuters India Mobile

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