Weak demand, falling prices hit Tata Steel profit

Tata Steel has missed quarterly profit expectations, amid weakened demand and sliding prices in its main European market, which served to offset strong domestic performance.

The steelmaker, whose European operations account for two thirds of its capacity, said yesterday that consolidated net profit for the quarter to end-June was down at Rs5.98 billion from Rs53.5 billion in the 2011 period which included one-time gains of about Rs40 billion.

Excluding the gains, profit fell to around 55 per cent.

Karl-Ulrich Koehler, head of Tata's European operations said, European steel demand was lower than expected and prices had weakened.

Tata Steel, whose steel deliveries in Europe were down 9.5 per cent had been countering poor market conditions with tight cost control and a focus on product differentiation, he added.

Meanwhile, the debt crisis raging in Europe, has left steel makers struggling even as the slower pace of expansion in China and weak growth in Japan have added to their worries.