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Tata Steel Reported Significant Improvement in First Quarter
05/30/2014 - Tata Steel said the improved and steady performance of operations across geographies, despite weak market conditions, led to significantly improved Group performance in the first quarter of the year.
Tata Steel Group today declared its Consolidated Financial Results for the financial year and fourth quarter ended 31 March 2014. There was a marked improvement in profitability as the Group net profits for the fourth quarter ended 31 March 2014 rose to `1,036 crores from `503 crores in the previous quarter. Similarly, for the full year ending 31 March 2014, the underlying net profit came in at `3,623 crores compared to the underlying profit of `332 crores for the year ended 31 March 2013. The improvement in the underlying profitability over the last year was `3,290 crores.
Group Performance Highlights:
· Group steel deliveries in FY 2013-14 (FY’14) increased to 26.56 million tonnes from 24.13 million tonnes in FY 2012-13 (FY’13). Deliveries in Q4 FY 2013-14 (Q4 FY’14) increased to 7.62 million tonnes compared to 6.38 million tonnes in Q3 FY 2013-14 (Q3 FY’14) and 6.56 million tonnes in Q4 FY 2012-13 (Q4 FY’13).
· Group consolidated turnover in FY’14 was `1,48,614 crores versus `1,34,712 crores in FY’13. Q4 FY’14 turnover increased to `42,428 crores from `36,736 crores in Q3 FY’14 and `34,650 crores in Q4 FY’13.
· FY’14 Group EBITDA was `16,377 crores compared to `12,654 crores in FY’13, implying an improvement of 29%. Q4 FY’14 EBITDA increased significantly to `4,917 crores from `3,921 crores in Q3 FY’14 and `4,368 crores in Q4 FY’13.
· Group Profit after Tax (after minority interest and share of profit of associates) in FY’14 swung to `3,595 crores versus the loss of `7,058 crores in FY’13. FY’14 results included exceptional charges of `28 crores compared to the charges of `7,390 crores in FY’13. Profit after tax in Q4 FY’14 doubled to `1,036 crores compared to `503 crores in Q3 FY’14 and was a significant improvement over the loss of `6,529 crores in Q4 FY’13. Q4 FY’14 results were affected by exceptional charges of `46 crores while the exceptional charges for Q4 FY’13 were `7,413 crores.
· The Group’s Basic and Diluted Earnings per share (EPS) for FY’14 increased to `35.19 from the loss of `74.54 in FY’13. EPS in Q4 FY’14 came in at `10.20 compared to `4.73 in Q3 FY’14 and the loss of `67.69 in Q4 FY’13.
· Cash and cash equivalents as on 31 March 2014 were `11,373 crores and net debt was `67,326 crores.
· The Board of Directors of the Company has recommended a dividend of `10 per equity share for the financial year ended 31 March 2014.
India
Performance of the Indian operations improved significantly despite the weak macroeconomic environment. There were significant achievements in terms of operations and financial performance.
· Several of our steelmaking facilities achieved their highest ever production in the last year. The rolling facilities of the brownfield expansion at Jamshedpur reached their full capacity in the second half of last year and total steel production was the highest ever. To cater to the increased requirements, the iron ore mines ramped up and produced record quantities. Steel demand in India remained almost flat in the last year, while our customer focus, better products and vast distribution network helped us to sell 1 million tonnes more over the previous year. Deliveries increased by 14% to 8.52 million tonnes in FY’14 from 7.48 million tonnes in FY’13. Q4 FY’14 deliveries increased to 2.41 million tonnes versus 2.07 million tonnes in Q3 FY’14 and 2.28 million tonnes in Q4 FY’13.
· Sales of Automotive and Special Products increased by 15% in FY’14 despite a ~5% decline in the auto market. Sale of Branded Products, Retail and Solutions constituted 34% of the total sales and increased by 11% over the previous year. Sale to Industrial Products, Projects and Exports increased by 18% over FY’13. Proactive market development has helped in expanding the domestic customer base with exports constituting only 2% of total sales in FY’14.
· Turnover in FY’14 was `41,711 crores compared to `38,199 crores in FY’13. Q4 FY’14 turnover increased by 20% to `12,191 crores from `10,143 crores in the previous quarter and `10,771 crores in Q4 FY’13. The sequential improvement in revenue was driven by higher volumes and better realisations.
· FY’14 EBITDA was `13,281 crores, up by 14% from `11,698 crores in FY’13. Q4 FY’14 EBITDA was `4,052 crores, 29% higher compared to `3,131 crores in Q3 FY’14, and 9% higher than `3,714 crores in Q4 FY’13. The EBITDA margin increased by 237 basis points in Q4 FY’14 compared to the previous quarter.
· Profit after tax in FY’14 was `6,412 crores, a 27% increase from `5,063 crores in FY’13. Q4 FY’14 profit was `1,979 crores, 30% higher than `1,519 crores in Q3 FY’14 and 51% higher than `1,309 crores in Q4 FY’13.
· Basic Earnings Per Share (EPS) in FY’14 increased to `64.21 from `50.28 in FY’13. EPS in Q4 FY’14 was `19.93 compared to `15.18 in Q3 FY’14 and `13.02 in Q4 FY’13.
Europe
The revamped blast furnace in UK together with improved reliability in Europe as a whole led to an increase in volumes compared to the previous year. Financial performance consequently improved, despite average market conditions being worse than in the previous year. Sales volumes also grew, as did the quality profile. The volume of new products sold rose by more than 75% in FY’14 compared to the previous year and the company launched 30 new products, as promised.
Progress on improving the product and service portfolio, including success in Early Vendor Involvement initiatives led to the company improving its standing with its customer base which was expressed through numerous customer recognition awards, such as Toyota awarding Tata Steel its Certificate of Recognition for the company's contribution in the area of quality.
· Liquid steel production in FY’14 increased 16% to 15.46 million tonnes from 13.37 million tonnes in FY’13. Q4 FY’14 production of 4.04 million tonnes was 3% higher than the 3.91 million tonnes produced in Q3 FY’14 and 26% higher than the 3.22 million tonnes produced in Q4 FY’13.
· Deliveries increased to 13.86 million tonnes in FY’14, up 6% from the 13.07 million tonnes in FY’13. Q4 FY’14 deliveries of 4.07 million tonnes were 27% higher than the 3.19 million tonnes in Q3 FY’14 and 19% higher than the 3.42 million tonnes in Q4 FY’13.
· Turnover in FY’14 was `84,666 crores versus `78,012 crores in the previous year. Q4 FY’14 turnover was `24,376 crores compared to `20,709 crores in Q3 FY’14 and `19,166 crores in Q4 FY’13.
· FY’14 EBITDA almost quadrupled to `3,008 crores from `764 crores in FY’13. Q4 FY’14 EBITDA of `817 crores was down from `860 crores in Q3 FY’14, but up from `613 crores in Q4 FY’13.
· FY’14 EBIT was a loss of `158 crores, an improvement on the `2,425 crores loss in the previous year. Q4 FY’14 EBIT was a loss of `16 crores compared to the loss of `2 crores in Q3 FY’14 but an improvement on the loss of `213 crores in Q4 FY’13.
South East Asia
The South East Asian operations reported steady performance on the back of operational improvements, cost reduction and restructuring despite severe import pressures in the region and continued political uncertainty in Thailand.
· FY’14 deliveries totalled 3.98 million tonnes, a 28% increase over the 3.11 million tonnes in FY’13. Q4 FY’14 deliveries were 1.07 million tonnes, slightly lower than 1.09 million tonnes in Q3 FY’14 but 34% higher than 0.8 million tonnes in Q4 FY’13.
· Turnover in FY’14 increased by 23% to `16,988 crores compared to `13,829 crores in FY’13. Q4 FY’14 turnover was `4,365 crores versus `4,537 crores in Q3 FY’14 and `3,486 crores in Q4 FY’13.
· EBITDA declined by 9% to `439 crores in FY’14 from `483 crores in FY’13 due to a severe cost-price squeeze. Q4 FY’14 EBITDA was `80 crores, lower than `137 crores in Q3 FY’14 and `224 crores in Q4 FY’13.
Financial Performance Analysis:
Consolidated financial results summary (under Indian GAAP) for the financial year and fourth quarter ended 31 March 2014
All figures in ` Crore, unless specified
Executive Comment
T V Narendran, managing director of Tata Steel India and South East Asia, said: “It’s been a high performance year at Tata Steel and a more gratifying one as we performed well against challenging market conditions both in India and South East Asia. We have performed better than industry growth figures across product / market segments with substantive increase in sales volumes. Sale of high-end products to automotive segment has been the highest ever despite a de-growth in the auto market in India. Our efforts to develop new markets in the SME segment with an innovative business model has enabled significant increase in sales of branded HR coils. We continue to spread our presence by strengthening our reach & customer connect through the retail route. Our focus remains on increasing value added downstream operations and delivering quality and innovative products/services across all verticals of our business. Our brown-field expansion of 2.9 mtpa in Jamshedpur fully ramped up in the second half, resulting in record high production of crude and saleable steel notwithstanding our scheduled maintenance shutdowns in Q3.
“The performance of our South East Asian operations continue to remain strong and have delivered positively to the overall bottom line of the company. We look forward to continuing on this growth trajectory and are focused on efficient execution of our expansion projects.”
Dr. Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: “The key to last year was our relentless focus on operational reliability, which restored our asset base and enabled our production to return to more usual levels. Our financial performance improved as a result. At the same time we advanced our high-quality portfolio programme, launching 30 new products as promised and increasing sales of new products by more than 75%. By intensifying our innovation efforts, our sales to automotive manufacturers grew against trend - a third of these sales were differentiated products which helped customers deliver cost, weight and performance improvements.
“Europe appears to be entering a phase of solid economic growth, which is supporting a recovery in steel demand. But EU steel use will remain at low levels historically against a background of continuing global overcapacity. Faced with these challenges we will intensify our efforts to achieve sustainable financial performance by continuing to improve the support and services we offer our customers and maintaining our focus on costs and operational efficiency.”
Koushik Chatterjee, group executive director (Finance and Corporate), said: “Group profitability showed sustainable improvement over the year on the back of strong performance in key regions. Despite weak market conditions in India, our business achieved higher sales and generated a higher EBITDA margin of 32% for the year. Our European operations also showed a strong recovery over FY’13, with higher volumes and an improvement in EBITDA margins by 257bps over the year. We spent around ₹16,400 crores on capex during the year, with a large portion deployed at our greenfield plant in Odisha. Despite this significant spend, we were able to keep the net debt level stable over the last quarter. Liquidity remains adequate with around ₹18,000 crores of cash and cash equivalents and undrawn credit lines, in addition to the undrawn KPO financing.”
Group Performance Highlights:
· Group steel deliveries in FY 2013-14 (FY’14) increased to 26.56 million tonnes from 24.13 million tonnes in FY 2012-13 (FY’13). Deliveries in Q4 FY 2013-14 (Q4 FY’14) increased to 7.62 million tonnes compared to 6.38 million tonnes in Q3 FY 2013-14 (Q3 FY’14) and 6.56 million tonnes in Q4 FY 2012-13 (Q4 FY’13).
· Group consolidated turnover in FY’14 was `1,48,614 crores versus `1,34,712 crores in FY’13. Q4 FY’14 turnover increased to `42,428 crores from `36,736 crores in Q3 FY’14 and `34,650 crores in Q4 FY’13.
· FY’14 Group EBITDA was `16,377 crores compared to `12,654 crores in FY’13, implying an improvement of 29%. Q4 FY’14 EBITDA increased significantly to `4,917 crores from `3,921 crores in Q3 FY’14 and `4,368 crores in Q4 FY’13.
· Group Profit after Tax (after minority interest and share of profit of associates) in FY’14 swung to `3,595 crores versus the loss of `7,058 crores in FY’13. FY’14 results included exceptional charges of `28 crores compared to the charges of `7,390 crores in FY’13. Profit after tax in Q4 FY’14 doubled to `1,036 crores compared to `503 crores in Q3 FY’14 and was a significant improvement over the loss of `6,529 crores in Q4 FY’13. Q4 FY’14 results were affected by exceptional charges of `46 crores while the exceptional charges for Q4 FY’13 were `7,413 crores.
· The Group’s Basic and Diluted Earnings per share (EPS) for FY’14 increased to `35.19 from the loss of `74.54 in FY’13. EPS in Q4 FY’14 came in at `10.20 compared to `4.73 in Q3 FY’14 and the loss of `67.69 in Q4 FY’13.
· Cash and cash equivalents as on 31 March 2014 were `11,373 crores and net debt was `67,326 crores.
· The Board of Directors of the Company has recommended a dividend of `10 per equity share for the financial year ended 31 March 2014.
India
Performance of the Indian operations improved significantly despite the weak macroeconomic environment. There were significant achievements in terms of operations and financial performance.
· Several of our steelmaking facilities achieved their highest ever production in the last year. The rolling facilities of the brownfield expansion at Jamshedpur reached their full capacity in the second half of last year and total steel production was the highest ever. To cater to the increased requirements, the iron ore mines ramped up and produced record quantities. Steel demand in India remained almost flat in the last year, while our customer focus, better products and vast distribution network helped us to sell 1 million tonnes more over the previous year. Deliveries increased by 14% to 8.52 million tonnes in FY’14 from 7.48 million tonnes in FY’13. Q4 FY’14 deliveries increased to 2.41 million tonnes versus 2.07 million tonnes in Q3 FY’14 and 2.28 million tonnes in Q4 FY’13.
· Sales of Automotive and Special Products increased by 15% in FY’14 despite a ~5% decline in the auto market. Sale of Branded Products, Retail and Solutions constituted 34% of the total sales and increased by 11% over the previous year. Sale to Industrial Products, Projects and Exports increased by 18% over FY’13. Proactive market development has helped in expanding the domestic customer base with exports constituting only 2% of total sales in FY’14.
· Turnover in FY’14 was `41,711 crores compared to `38,199 crores in FY’13. Q4 FY’14 turnover increased by 20% to `12,191 crores from `10,143 crores in the previous quarter and `10,771 crores in Q4 FY’13. The sequential improvement in revenue was driven by higher volumes and better realisations.
· FY’14 EBITDA was `13,281 crores, up by 14% from `11,698 crores in FY’13. Q4 FY’14 EBITDA was `4,052 crores, 29% higher compared to `3,131 crores in Q3 FY’14, and 9% higher than `3,714 crores in Q4 FY’13. The EBITDA margin increased by 237 basis points in Q4 FY’14 compared to the previous quarter.
· Profit after tax in FY’14 was `6,412 crores, a 27% increase from `5,063 crores in FY’13. Q4 FY’14 profit was `1,979 crores, 30% higher than `1,519 crores in Q3 FY’14 and 51% higher than `1,309 crores in Q4 FY’13.
· Basic Earnings Per Share (EPS) in FY’14 increased to `64.21 from `50.28 in FY’13. EPS in Q4 FY’14 was `19.93 compared to `15.18 in Q3 FY’14 and `13.02 in Q4 FY’13.
Europe
The revamped blast furnace in UK together with improved reliability in Europe as a whole led to an increase in volumes compared to the previous year. Financial performance consequently improved, despite average market conditions being worse than in the previous year. Sales volumes also grew, as did the quality profile. The volume of new products sold rose by more than 75% in FY’14 compared to the previous year and the company launched 30 new products, as promised.
Progress on improving the product and service portfolio, including success in Early Vendor Involvement initiatives led to the company improving its standing with its customer base which was expressed through numerous customer recognition awards, such as Toyota awarding Tata Steel its Certificate of Recognition for the company's contribution in the area of quality.
· Liquid steel production in FY’14 increased 16% to 15.46 million tonnes from 13.37 million tonnes in FY’13. Q4 FY’14 production of 4.04 million tonnes was 3% higher than the 3.91 million tonnes produced in Q3 FY’14 and 26% higher than the 3.22 million tonnes produced in Q4 FY’13.
· Deliveries increased to 13.86 million tonnes in FY’14, up 6% from the 13.07 million tonnes in FY’13. Q4 FY’14 deliveries of 4.07 million tonnes were 27% higher than the 3.19 million tonnes in Q3 FY’14 and 19% higher than the 3.42 million tonnes in Q4 FY’13.
· Turnover in FY’14 was `84,666 crores versus `78,012 crores in the previous year. Q4 FY’14 turnover was `24,376 crores compared to `20,709 crores in Q3 FY’14 and `19,166 crores in Q4 FY’13.
· FY’14 EBITDA almost quadrupled to `3,008 crores from `764 crores in FY’13. Q4 FY’14 EBITDA of `817 crores was down from `860 crores in Q3 FY’14, but up from `613 crores in Q4 FY’13.
· FY’14 EBIT was a loss of `158 crores, an improvement on the `2,425 crores loss in the previous year. Q4 FY’14 EBIT was a loss of `16 crores compared to the loss of `2 crores in Q3 FY’14 but an improvement on the loss of `213 crores in Q4 FY’13.
South East Asia
The South East Asian operations reported steady performance on the back of operational improvements, cost reduction and restructuring despite severe import pressures in the region and continued political uncertainty in Thailand.
· FY’14 deliveries totalled 3.98 million tonnes, a 28% increase over the 3.11 million tonnes in FY’13. Q4 FY’14 deliveries were 1.07 million tonnes, slightly lower than 1.09 million tonnes in Q3 FY’14 but 34% higher than 0.8 million tonnes in Q4 FY’13.
· Turnover in FY’14 increased by 23% to `16,988 crores compared to `13,829 crores in FY’13. Q4 FY’14 turnover was `4,365 crores versus `4,537 crores in Q3 FY’14 and `3,486 crores in Q4 FY’13.
· EBITDA declined by 9% to `439 crores in FY’14 from `483 crores in FY’13 due to a severe cost-price squeeze. Q4 FY’14 EBITDA was `80 crores, lower than `137 crores in Q3 FY’14 and `224 crores in Q4 FY’13.
Financial Performance Analysis:
Consolidated financial results summary (under Indian GAAP) for the financial year and fourth quarter ended 31 March 2014
All figures in ` Crore, unless specified
| FY'14 | FY'13 | HIGHLIGHTS | Q4 FY'14 | Q3 FY'14 | Q4 FY'13 |
| 26.56 | 24.13 | Steel Deliveries (million tons) | 7.62 | 6.38 | 6.56 |
| 148,614 | 134,712 | Turnover | 42,428 | 36,736 | 34,650 |
| 16,377 | 12,654 | EBITDA | 4,917 | 3,921 | 4,368 |
| 5,841 | 5,575 | Depreciation | 1,472 | 1,522 | 1,470 |
| 3,855 | 3,517 | Net Finance Charges | 999 | 1,001 | 913 |
| 6,722 | -4,133 | PBT | 2,436 | 1,395 | -5,576 |
| 3,595 | -7,058 | Profit after Taxes, Minority Interest and Share of Associates | 1,036 | 503 | -6,529 |
| 35.19 | -74.54 | Basic and Diluted Earnings per Share (`) | 10.20 | 4.73 | -67.69 |
Executive Comment
T V Narendran, managing director of Tata Steel India and South East Asia, said: “It’s been a high performance year at Tata Steel and a more gratifying one as we performed well against challenging market conditions both in India and South East Asia. We have performed better than industry growth figures across product / market segments with substantive increase in sales volumes. Sale of high-end products to automotive segment has been the highest ever despite a de-growth in the auto market in India. Our efforts to develop new markets in the SME segment with an innovative business model has enabled significant increase in sales of branded HR coils. We continue to spread our presence by strengthening our reach & customer connect through the retail route. Our focus remains on increasing value added downstream operations and delivering quality and innovative products/services across all verticals of our business. Our brown-field expansion of 2.9 mtpa in Jamshedpur fully ramped up in the second half, resulting in record high production of crude and saleable steel notwithstanding our scheduled maintenance shutdowns in Q3.
“The performance of our South East Asian operations continue to remain strong and have delivered positively to the overall bottom line of the company. We look forward to continuing on this growth trajectory and are focused on efficient execution of our expansion projects.”
Dr. Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: “The key to last year was our relentless focus on operational reliability, which restored our asset base and enabled our production to return to more usual levels. Our financial performance improved as a result. At the same time we advanced our high-quality portfolio programme, launching 30 new products as promised and increasing sales of new products by more than 75%. By intensifying our innovation efforts, our sales to automotive manufacturers grew against trend - a third of these sales were differentiated products which helped customers deliver cost, weight and performance improvements.
“Europe appears to be entering a phase of solid economic growth, which is supporting a recovery in steel demand. But EU steel use will remain at low levels historically against a background of continuing global overcapacity. Faced with these challenges we will intensify our efforts to achieve sustainable financial performance by continuing to improve the support and services we offer our customers and maintaining our focus on costs and operational efficiency.”
Koushik Chatterjee, group executive director (Finance and Corporate), said: “Group profitability showed sustainable improvement over the year on the back of strong performance in key regions. Despite weak market conditions in India, our business achieved higher sales and generated a higher EBITDA margin of 32% for the year. Our European operations also showed a strong recovery over FY’13, with higher volumes and an improvement in EBITDA margins by 257bps over the year. We spent around ₹16,400 crores on capex during the year, with a large portion deployed at our greenfield plant in Odisha. Despite this significant spend, we were able to keep the net debt level stable over the last quarter. Liquidity remains adequate with around ₹18,000 crores of cash and cash equivalents and undrawn credit lines, in addition to the undrawn KPO financing.”
