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Tata steel swings to profit for first time in five quarters
[MUMBAI] Tata Steel Ltd swung to a profit in the third quarter, the first gain in five periods, boosted by a recovery in product prices and higher production.
Group net profit was 2.3 billion rupees (S$48.3 million) in the three months to Dec 31, from a loss of 27.5 billion rupees a year earlier, according to a statement from the Mumbai-based company Tuesday. Revenue for the quarter was 293.9 billion rupees, compared with 257.7 billion rupees a year earlier.
Global mills such as South Korea's Posco and India's JSW Steel Ltd have seen profits jump after steel prices advanced because of government stimulus in China, the world's biggest consumer. At the same time, a ramp up in capacity in India saw volumes increase, boosting sales of local mills.
Total costs advanced 3.9 per cent to 272.3 billion rupees, while finance costs rose 41 percent to 13.9 billion rupees, the company said. Net debt was 766.8 billion rupees while cash and cash equivalents were about 150 billion rupees, it said.
"The financial performance reflects strong underlying operating performance across the group in spite of a seasonally slow quarter in Europe," Group Executive Director Koushik Chatterjee said in the statement. "While there were challenges on the working capital levels due to increased prices of both raw materials and finished goods especially in Europe, the company has been able to maintain its overall debt level at the end of the quarter."
The company also named N. Chandrasekaran as chairman of the board after parent company Tata Sons Ltd ousted former chairman Cyrus Mistry in October. A bitter, public fight between scion Ratan Tata and Mistry - who continues to battle his ouster in court - has roiled the group for months.
In December, the company struck a deal with unions to secure future production and jobs at its Port Talbot plant in Wales and other UK sites. As part of the deal, Tata said it will consult the unions on closing its British Steel Pension Scheme and replacing it with a defined contribution plan.
"The strategic initiatives in the UK on the pensions continue to be an important priority for the company and we welcome the Unions recommendation to its members to support the ballot process that is currently on to close the BSPS to future accruals," Mr Chatterjee said on Tuesday.
In November, Tata also said it had started talks for the sale of its UK specialty steels business to Liberty House Group business for £100 million (S$176.1 million). There was no update on the status of talks in today's statement.
Tata Steel's crude-steel production rose 15 per cent to 8.5 million tons in the April to December period mainly because of a ramp up in production at its Kalinganagar plant, it said last month. The shares of company, which reported earnings after the close of trade, dropped 0.1 per cent to 472.80 rupees in Mumbai on Tuesday.
Indian mills are increasing capacities betting on Prime Minister Narendra Modi's plans to invest in infrastructure. Last week, the government announced plans to spend a record 3.96 trillion rupees in the financial year starting April to build railways, airports and roads.