Tata Steel’s second-quarter profit beats on higher sales volumes, lower costs

TATA Steel reported a second-quarter profit on Wednesday (Nov 6) that beat analysts’ estimates as lower costs and higher sales volumes in India and the Netherlands offset a steep drop in steel prices.

India’s second-biggest steelmaker by market value posted a consolidated net profit of 8.33 billion rupees (S$132 million) in the quarter, compared with the average analyst estimate of 2.23 billion rupees, according to data compiled by LSEG.

The company had reported a loss of 61.96 billion rupees in the same period a year earlier, hurt by a 63.58 billion rupees charge related to the restructuring of its Port Talbot operations in Wales.

Tata Steel Netherlands’ liquid steel volumes rose 28 per cent in the second quarter to 1.57 million tonnes, while India deliveries rose about 6 per cent.

The company’s Netherlands operations reported a core profit of 17.85 billion rupees, compared with a loss a year earlier, helped by lower energy costs and an uptick in sales volumes.

Tata Steel’s overall consolidated core profit margins rose to 12 per cent in the second quarter from 8 per cent a year earlier.

The company’s quarterly input costs fell 1.4 per cent to 201.87 billion rupees as costs of key steelmaking raw materials such as iron ore and coking coal declined.

Meanwhile, demand in India, the world’s second-biggest crude steel producer, was sluggish as above-average rainfall impacted construction activity.

“Macro-economic conditions in China continued to weigh on commodity prices including steel. In India, steel demand continued to improve but domestic prices were under pressure due to cheap imports,” Tata Steel CEO TV Narendran said.

In August, commodities consultancy BigMint said steel prices in India had plunged to the lowest level in more than three years.

Tata Steel’s revenue fell 3.2 per cent to 539.05 billion rupees in the second quarter ending September, ahead of estimates of 537.34 billion rupees. REUTERS