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Tata Steel Reports Q1 Results
08/15/2011 - Tata Steel Group recorded profit after tax of 5,347 crores (US$1.2 billion) in Q1 FY’12, ended June 30, 2011, almost three times the profit recorded in last year’s first quarter.
Tata Steel Group recorded profit after tax of 5,347 crores (US$1.2 billion) in Q1 FY’12, ended June 30, 2011, almost three times the profit of 1,825 crores (US$408 million) recorded in last year’s first quarter.
The Group recorded EBITDA of 8,358 crores (US$1.9 billion) in Q1 FY’12, which included one-off gains of 4,007 crores (US$896 million). The underlying EBITDA was 4,351 crores (US$974 million) compared to the EBITDA recorded in the same period a year ago of 4,506 crores (US$1 billion).
Group revenue in the first quarter of 33,000 crores (US$7.4 billion) was an increase of 21.4% over 27,194 crores (US$6.1 billion) recorded in Q1 FY’11, due to higher average realizations and volumes. Group deliveries of 6.1 million tonnes in Q1 FY’12 were 3.1% higher than the deliveries of 5.9 million tonnes recorded in last year’s Q1.
The Indian operations continued to perform strongly, with EBITDA of 3,656 crores (US$818 million) and profit after tax of 2,219 crores (US$497 million). The underlying EBITDA margin, excluding one-off gains of 511 crores (US$ 114 million), was 40% in Q1 FY’12, or 3.3 percentage points higher than the EBITDA margin of 36.7% in Q4 FY’11.
The European operations performed steadily on the strength of higher average realizations. EBITDA of 1,907 crores (US$ 427 million) was 41.2% higher than the EBITDA recorded in Q1 FY’11 of 1,351 crores (US$ 302 million).
Net debt at the end of June 2011 of 40,824 crores (US$9.13 billion) was lower than the 46,627 crores (US$10.43 billion) recorded at the end of March.
The company divested its stake in Riversdale Mining Ltd (RML) for a consideration of 4,942 crores (US$1,106 million). Following this stake sale, the company continues to hold a 35% stake in Riversdale Energy (Mauritius) Ltd, a project company currently developing the Benga coal tenement in Mozambique.
Executive Comment—Tata Steel Managing Director HM Nerurkar said: “Volumes and earnings from the Indian operations were robust despite signs of slower growth in India. Deliveries in Q1 rose 14% over the previous year on the back of successful marketing and collaboration with key customers on product development. We are continuing to consolidate the gains captured in recent quarters through our company-wide Continuous Improvement programs, though high raw material prices and monetary tightening in India remain cause for concern.
“Our next expansion phase at Jamshedpur will start coming on stream in the last quarter of this financial year and the Odisha Greenfield project is progressing well, with the first 3 million tonnes-per-annum phase due for commissioning in 2014. In South East Asia we continue our efforts to improve performance through new product launches, cost reduction measures, and operating initiatives.”
Tata Steel Europe MD & CEO Dr. Karl-Ulrich Köhler said: “Tata Steel followed up the exceptional March quarter by delivering an encouraging performance in April-June, even though the weakening of the European steel market, which affected our deliveries, was made worse by rising imports. European steelmakers also faced the challenge of sharp raw material cost increases, which have largely been maintained into this quarter, despite the uncertain economic outlook. We continued to work on our strategy of strengthening customer relationships and cost leadership, including initiating a process that is designed to turn around the performance of our Long Products business and return it to profitability.”
