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Tata Steel posts Q4 net loss of Rs 3,279cr; sales at Rs 29,507cr

Chillicious Team

Tata Steel said it posted fourth quarter consolidated revenues of Rs 29,507 crore (down 12.4 percent from Rs 33,666 crore year-on-year), EBITDA of Rs 2,270 crore (up 43.7 percent from Rs 1,580 crore) and a net loss of Rs 3,279 crore (compared to Rs 5,702 crore).

Revenues and net loss were worse than analysts’ estimates, which expected the company to post a loss of Rs 870 crore on revenues of Rs 30,813 crore. EBITDA was ahead of estimates of Rs 1,430 crore.

The company said its operating performance remained strong, especially in the India business, and that fourth quarter earnings were impacted due to one-off costs associated with the UK business, such as impairment of non-current assets (Rs 1,724 crore), employee separation compensation (Rs 239 crore) and restructuring and other provisions (Rs 856 crore), among others.

“While the pressure on the product prices continued during the quarter both in India and in Europe, our operations during the quarter were very resilient across most of the geographies and have reported much improved underlying performance compared to the previous quarter,” said Kaushik Chatterjee, Group ED – Finance, Tata Steel.

For the overall business, the company recorded steel deliveries of 6.94 million tonne during the quarter, down 1.6 percent year-on-year from 7.06 million tonne.

India business remains strong

From its India business, the company clocked net profit of Rs 676 crore and EBITDA of Rs 2,188 crore on revenues of Rs 10,522 crore.

Domestic EBITDA/tonne stood at Rs 8,050, compared to analysts estimates of Rs 7,500-8,000, and ahead of Rs 6,921 year-on-year.

“Despite muted market environment, Tata Steel India operations recorded strong growth in the quarter and volumes grew by 16 percent on the back of growth in high value segments like auto and branded products,” the company said.

“For FY16, India deliveries increased by 9 percent with best ever sales of 9.54 million tonne, far in excess of the market which grew at 4.5 percent over the period. Domestic steel prices in India declined compared to previous quarter and the impact of the MIP did not reflect in the market prices.”

The company also announced the start of commercial production at the 3 MTPA Kalinganagar steel plant.

No clarity on UK business sale

Given the challenging situation faced in Europe, the company said it has taken several steps to restructure the European operations.

“Tata Steel UK Limited signed an agreement with Greybull Capital to sell its Long Products Europe business,” it said. “The deal will be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements.”

The Tata Steel Europe board under the advice of the Tata Steel board is actively reviewing all options for the Tata Steel UK business including a potential sale of the business.

At the earnings press conference, Chatterjee said the company was evaluating bids for its UK assets but had not yet short-listed bidders for the sale.

“Some bidders have submitted final bids. We have sought some clarity. We continue to work closely with the UK government [over the sale issue],” he said.

To be updated