Tata Steel, one of the largest steel producers in the country, on Friday reported a consolidated net profit of Rs 11.35 billion in the December quarter, up five times from the corresponding period last year, on the back of higher revenues mainly from domestic operations. The company had reported a net profit of Rs 2.31 billion in the third quarter of 2016-17.
Tata Steel’s consolidated net sales in the period under review were at Rs 330.9 billion, up 14.4 per cent from the same period last year, as domestic operations showed a stronger contribution to the total sales.
“Tata Steel group revenues witnessed robust growth driven by improved India volumes and stronger realisations across geographies, on the back of improvement in commodity prices and an expansion in spreads globally,” Koushik Chatterjee, executive director and chief financial officer, Tata Steel, was quoted as saying in a release.
According to Bloomberg estimates, Tata Steel’s topline was seen at Rs 320 billion in the December quarter, while net profit was expected to be Rs 12.88 billion.
The company’s consolidated quarterly deliveries of 6.56 million tonnes were up 8 per cent on a year-on-year basis, with India deliveries now contributing 50 per cent to group deliveries. Tata Steel’s net profit would have been stronger without the Rs 11.15 billion exceptional item, which was a provision the company recognised in respect of certain demands and claims from regulatory authorities relating to Indian operations. Adjusting for the same, the company’s profits would have come ahead of consensus estimates. Tata Steel earned a profit before interest and tax of Rs 31.20 billion in the quarter gone by as against Rs 9.99 billion in the corresponding period last year.
tata steel financials
Consolidated earnings before interest,taxes, depreciation, and amortisation (Ebitda) in the period under review stood at Rs 58.01 billion, up 59 per cent from the corresponding period last year. This was much better than consensus analyst estimates of Rs 51.63 billion as indicated by Bloomberg. On a sequential basis too, the Ebitda improved from Rs 47.26 billion in the previous quarter. Though there was a rise in coking coal costs sequentially, the company effectively has reduced coking coal conversion costs. “We continue to focus on opportunistically raising capital and optimising our financial flexibility,” Chatterjee said.
In India, revenues during the quarter were higher on a year-on-year basis due to better volumes and improved realisations, said the release. The Ebitda for the quarter from India operations increased 37 per cent on a year-on-year basis to Rs 46.47 billion as sales growth was broad based with best-ever performance across verticals, said the management.
With regard to European operations, the company reported a weak Ebitda both on a year-on-year as well as quarter-on-quarter basis mainly due to increased maintenance spend and lower yields during planned outages. However, the following quarters are seasonally strong quarters and European operations are to witness improved profitability.