Shares of steel giant Tata Steel slipped over 4 per cent on Monday as the firm posted consolidated loss of Rs 1,229 crore for the quarter ended December 31, 2019 (Q3FY20) against a profit of Rs 1,753 crore profit in the year-ago period.
It reported a consolidated loss before tax of Rs 236 crore in the December quarter, against a profit of Rs 3,140 crore in the same period a year ago, on the back of lower sales. Consolidated net sales in the period stood at Rs 34,774 crore, down 9 per cent from the same period a year ago, as lower steel demand and weak prices of the commodity hurt the top line. READ MORE
"During 3QFY20, global economic growth further slowed down amidst heightened concerns of a US-China trade war. Regional steel prices were down as steel demand was affected by weaker industrial output in key markets. However, Chinese apparent steel consumption remained steady and steel exports stabilized below 5 million tons a month," Tata Steel said in its press release.
The Indian economy remained weak during the quarter and domestic steel prices reached a nadir in October 2019. However, steel prices are on an upward trend since November with inventory rationalization and increase in government spending. Market sentiments have improved as recent PMI manufacturing and bank credit growth data suggest pick-up in activity levels ahead, the release added.
According to Bloomberg estimates, Tata Steel’s consolidated net sales was seen at Rs 35,000 crore and bottom line was expected to be a profit of Rs 278 crore.
“Tata Steel delivered strong growth in volumes despite poor macroeconomic conditions in India as well as globally. In India, our business model helped us counter the slowdown as we successfully penetrated new markets and expanded our customer universe. We were also able to maintain our sales to the auto segment despite the sluggishness faced by the auto industry. Both our acquisitions, Tata Steel BSL and Tata Steel Long Products, continue to deliver operational improvements and achieve milestones in the market place. However, our European operations made a loss as it felt the brunt of the overall slowdown and the consequent shrinking of spreads. This adversely affected our consolidated performance," said T V Narendran, CEO & Managing Director. CLICK TO READ THE PRESS RELEASE
At 09:36 am, Tata Steel was trading over 4 per cent lower at Rs 452 apiece on the BSE as compared to a 157-point or 0.38 per cent decline in the S&P BSE Sensex.