Tata Steel back in the black with Q1 net profit of Rs921 cr

Tata Steel Ltd has reported a Rs921-crore net profit for fiscal first quarter ended 30 June 2017, against a net loss of Rs3,183 crore in the year-ago quarter, helped in large measure by ramped up supplies from its Kalinganagar plant that boosted sales.

Tata Steel had suffered a loss of Rs3,296 crore related to the sale of its long products business in Britain to Greybull Capital LLP in May 2016.

Tata Steel said its consolidated net (after-tax) profit from continuing operations (before exceptional items) for the quarter stood at Rs1,550 crore compared with Rs377 crore in the first quarter of the previous fiscal and Rs3,352 crore in the previous quarter.

Consolidated total income rose 19 per cent to Rs31,129 crore versus Rs26,107 crore last year, aided by increased capacity in India and Tata's restructuring efforts in Europe, Koushik Chatterjee, group executive director (Finance and Corporate), said.

The company said total steel deliveries in the first quarter were up about 9 per cent at 5.83 million tonnes, with domestic deliveries accounting for 47 per cent of the total.

''Our sales were up by 28% on a y-o-y basis as the smooth ramp up of our Kalinganagar facility helped us increase our volumes and increase our market share. We saw strong growth in our branded products, retail and solutions segment which increased 19 per cent y-o-y and now contributes around 48 per cent of overall revenues,'' T V Narendran, managing director, Tata Steel India and South East Asia, said in a statement.

On sequential basis, the company said, there was inventory destocking across channels in run up to the GST launch, which led to drop in volumes.

Gross debt increased by Rs4,798 crore due to foreign exchange impact, inventory buildup in India as a result of GST implementation and seasonal trends in Europe.

Net debt at the end of June 30 was Rs 71,703 crore.

Tata Steel said it had cash and cash equivalent of Rs16,109 crore at the end of the quarter. Total liquidity, including undrawn bank lines, stood at Rs23,827 crore.

The company said "appreciating rupee remains a cause for concern" but that it "remains positive in the outlook for India steel markets".

Tata Steel's shares rose as much as 4.5 per cent to a six-year high, ahead of the results.

Tata Steel said branded products and retail sales grew 19 per cent year-on-year and now comprise 48 percent of its total sales.

Tata Steel said its Jamshedpur continues to be the benchmark in India for Coke & Pulverized Coal Injection (PCI) usage and achieved lowest best-ever coke rate of 348 kg / tonne of hot metal and PCI rate of 180 kg / tonne of hot metal in Q1FY18.

On its European operations, Tata Steel said liquid steel production in the first quarter of 2.79 million tonnes was 7 per cent higher on a sequential basis and YoY.

Deliveries in Q1 were 3 per cent lower YoY and 16 per cent lower than the seasonally strong fourth quarter.

Revenues in the first quarter were £1,703 million, up 28 per cent reflecting the improved market conditions and increased sales of differentiated products. While selling prices increased, lower deliveries led to a 6 per cent decrease in revenue compared to the previous quarter.

EBITDA was £152 million, up 63 per cent due to more favourable market and currency conditions as well as ongoing measures to improve the competitiveness of the UK operations. EBITDA was lower by 36 per cent on a sequential basis due to higher raw material costs and lower deliveries.

Revenue for South East Asia operations was Rs1,995 crore, which was at par with Q1FY17.

EBITDA declined by 88 per cent due to lower scrap – rebar local spreads in the region and weak market conditions particularly at NatSteel.