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Tata Steel Reports Consolidated Financial Results for the Quarter and Half Year Ended September 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
India Tata Steel Group (the “Company”) today declared its Consolidated Financial Results for the second quarter (Q2 FY’16) ended September 30, 2015. The Group recorded consolidated Turnover of Rs. 29,305 crores and Profit After Tax of Rs.1,529 crores for the quarter ended September 30, 2015. For the half year ended September 30, 2015, the Group recorded consolidated Turnover of Rs. 59,605 crores and Profit After Tax of Rs. 2,292 crores
Consolidated Performance Highlights: All figures in Rs.crores unless specified
*excludes one offs and profit on sale of quoted investments
During the quarter under review, domestic realisations in India continued to witness increasing pressure. Subdued manufacturing activity in the country adversely affected the underlying domestic steel demand which decreased by 5% over the previous quarter. Further the relatively strong currency exarcebated the problem. India continued to see strong imports from China and other FTA countries like Japan and Korea with net imports rising by over 100% over corresponding period last year. Towards end September, the government raised tariff barriers but the subsequent slide in steel prices has negated the impact of the same.The overall demand of the material intensity sectors in the economy remained muted and it is expected that the policy reforms undertaken by the Government will manifest gradually in the underlying domestic steel demand over the next 2 years.
Profit after tax in Q2 FY’16 was at Rs. 2,523 crores and Earnings Per Share was Rs.25.53
Europe Market conditions in Europe, primarily in the UK significantly worsened in the quarter as UK continues to witness surge in imports and declining competitiveness of themanufacturing sector due to weak industrial demand, strengthening of the sterling and adverse regulatory and business conditions. In response to the above market and business conditions in the UK, the Company continues to restructure its UK business and has recently announced the closure of some of the sites in the UK. Further during the quarter under review, Tata Steel UK has taken significant impairment charges in the UK Strip business as explained later in the note under the Exceptional Items below.
Key points on the operational performance of TSE
South East Asia The South East Asian operations continue to witness drop in rebar-scrap spreads and intense pricing pressure on back of imports from China. However, the renewed focus on cost saving initiatives, new markets, downstream sales and exports, led to improved profitability. The Company has also decided to restructure its Chinese operations in Xiamen and consequently have taken a charge of Rs.158 crores during this quarter. .
Other Highlights:
Exceptional items
Executive Comment Mr. T V Narendran, Managing Director of Tata Steel India and South East Asia, said, "Despite the ongoing downturn in global commodity prices and the seasonal weakness in demand, we were able to increase our deliveries by 9% during the quarter on the back of strong sales to the auto sector and a higher proportion of value added products. We continue investing in delivering value to our customers and in our brands and distribution network across India. This coupled with better operational efficiencies has helped us partially counter the headwinds of increasing imports and lower steel prices.
Dr. Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said, “Our operating result has turned negative this year, reflecting the huge challenges the global steel industry is facing. In the UK these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness. We have made three restructuring announcements in the UK since July leading to reduced volume and costs. We are working with the UK government to urgently secure a more competitive trade and regulatory environment and we will support our employees affected by restructuring. We are also continuing to assess all the strategic options for our Long Products business. Across Europe we are calling on governments to ensure the European Commission upholds international trade rules firmly and more speedily. Surging volumes of dumped imports, including from countries that subsidise their steelmakers, are massively distorting competition.
But we will not let this challenging marketplace divert us from our objective of making advances for our customers by developing higher-value products which give them a competitive edge. We will continue to optimise our Strip Products business and look to realise the world-class potential and strategic locational advantages at our IJmuiden facility.”
Mr. Koushik Chatterjee, Group Executive Director (Finance and Corporate), said, "The underlying operating performance of the Tata Steel Group in this quarter has been impacted by weak economic environment, relative currency movements and a surge in imports in key geographies such as the UK, India and Europe. In these challenging times, we have continued our efforts to strengthen our operations, widen and deepen the marketing franchise and manage the balance sheet effectively. The Indian business has done well operationally but continues to bear the brunt of declining global steel realisations, weak domestic demand, a relatively strong currency and significant regulatory charges especially on our mining activity in Jharkhand. While our Ijmuiden performance continues to be competitive and profitable, the business in the UK faces significant structural headwinds that witnessed rapid deteoriation in the market prices in the last few months due to surge in imports. This has compelled us to continue to restructure the business and as a consequence take very significant impairment in the asset value of Tata Steel UK and provide for further restructuring costs. During the first half of the current fiscal, we have raised internal equity of Rs. 4,200 crores by continuing to monetise our non-core assets. We have also successfully restructured the British Steel Pension Scheme and completed the trinennial valuation of the Scheme. Despite incurring a capex of over Rs. 5,800 crores in the last 6 months, the gross debt has been stable and the company has reduced its net leverage levels by around Rs. 3,000 crores compared to the previous quarter end.”
Disclaimer Statements in this press release describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in or due to the environment, Government regulations, laws, statutes, judicial pronouncements and/or other incidental factors. |
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Media Contact Details
Kulvin Suri
Tata Steel +91 657 664 5512/+91 92310 52397 Bob Jones
Tata Steel +44 207 717 4532 |
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