Tata Steel Limited reported profit after tax (after minority interest and share of profit of associates) of 1,825 crores (US$ 393 million) for the quarter ended June 30, 2010, the first quarter of the financial year 2010-11 (Q1 FY’11). Results reflect an improvement of 4,034 crores (US$ 869 million) compared to a loss of 2,209 crores (US$ 476 million) in the year-ago first quarter (Q1 FY’10).
Group EBITDA for the first quarter was 4,527 crores (US$ 975 million), an improvement of 4,323 crores (US$ 931 million) compared to EBITDA of 204 crores (US$ 44 million) in Q1 FY’10. The company said the improvement in EBITDA was attributable mainly to the significant turnaround in financial performance of the European operations as well as a greatly improved financial performance in India.
The Group’s steel deliveries reached 6.05 million tonnes, a 13% increase compared to Q1 FY’10 thanks to capacity utilization improvements in Europe. Deliveries fell by fell 6% compared to the previous quarter (Q4 FY’10), which the company said was due to sluggish market conditions in India, offset by higher average selling prices across all product segments and geographies.
The Group continued to enjoy a strong liquidity position (including undrawn credit lines) of 13,277 crores (US$ 2,859 million) as at the end of June 2010, resulting from tight working capital management across all geographies, according to the company. The Group’s net debt at the end of June 2010 stood at 45,713 crores (US$ 9,843 million).
“In April-June, the recovery of the European operations continued,” commented Tata Steel Europe MD & CEO Mr. Kirby Adams. “Not only was there a US$ 692 million turnaround in Corus’ year-on-year EBITDA performance, there were also significant improvements in revenue and capacity utilization. This was the result of higher selling prices and the fact that the full impact of recent raw materials price rises on profitability had yet to be felt. European demand has improved in sectors like automotive and aerospace. However, the long-term sustainability of the recovery is highly dependent on future growth in the European construction sector.”
Tata Steel Managing Director H.M. Nerurkar added, “Steel demand and prices have both recovered strongly in the last two quarters. While the recent surge in imports affected our sales to some extent, the year should see a strong performance from our Indian operations, backed by full availability of the 6.8 million tonnes p.a. capacity, several improvement programs in place and strong growth in demand.”
Nerurkar added that the three-million-tonne expansion at Jamshedpur, “a priority for us”, is “on schedule.”
At Tata Steel India, EBITDA at 2,965 crores (US$ 638 million) was up by 66% compared to Q1 FY’10 and down by 18% compared to Q4 FY’10. (The company noted that Q4 FY’10 EBITDA was higher on account of an increase in deliveries as well as profits on sale of investments.) Operational EBITDA per tonne, excluding profits on the sale of investments, rose 16% compared to the previous quarter (Q4 FY’10).
Saleable steel production in Q1 FY’11 rose by 3% to 1.59 million tonnes compared to Q1 FY’10 and dropped by 6% compared to Q4 FY’10. Operations at Jamshedpur were affected during the quarter by two major power failures in April and May.
For Tata Steel Europe (Corus), EBITDA at 1,363 crores (US$ 293 million) rose from a loss of 1,853 crores (US$ 399 million) in Q1 FY’10 and fell by 17% compared to Q4 FY’10. The company said the sequential drop in EBITDA was due to translation losses. A fire at IJmuiden resulted in production losses and increased maintenance expenses in Q1 FY’11.
Liquid steel production in Q1 FY’11 rose by 32% to 3.74 million tonnes compared to Q1 FY’10 and dropped marginally by 0.1% compared to Q4 FY’10, while deliveries rose by 19% to 3.71 million tonnes compared to Q1 FY’10 and dropped by 2% compared to Q4 FY’10.
Tata Steel Europe made rapid progress in developing the new operating model that will transform the Company into a more integrated, customer-focused business. As well as establishing a new Group Marketing function, a pilot manufacturing hub, “Longs EU”, has been set up based at Scunthorpe. Consultations continue on the establishment of other manufacturing hubs covering strip products.
Production at Company plants also continued to rise, with weekly production records set at the Port Talbot blast furnaces. IJmuiden set a new quarterly production record for hot-dip galvanized coil of about 100,000 tonnes.
Cost saving and restructuring programs launched in Tata Steel Europe in the 2008-09 financial year continue to accrue an estimated £350 million (US$ 524 million) in annual benefits. The company also continued to reduce CO2 emissions, inaugurating a £60 million BOS gas recovery plant at Port Talbot.
At NatSteel, EBITDA at 94 crores (US$ 20 million) was up by 114% compared to Q1 FY’10 and by 95% compared to Q4 FY’10. Finished steel production in Q1 FY’11 dropped by 1% to 0.375 million tonnes compared to Q1 FY’10 and by 13% compared to Q4 FY’10, while deliveries rose by 12% to 0.609 million tonnes compared to Q1 FY’10 and dropped by 13% compared to Q4 FY’10.
At Tata Steel Thailand, EBITDA at 56 crores (US$ 12 million) was up by 1,295% compared to Q1 FY’10 and by 273% compared to Q4 FY’10. Finished steel production in Q1 FY’11 rose by 16% to 0.304 million tonnes compared to Q1 FY’10 and dropped by 14% compared to Q4 FY’10, while deliveries rose by 13% to 0.297 million tonnes compared to Q1 FY’10 and dropped by 6% compared to Q4 FY’10.