Tata Steel Ltd.’s first-quarter profit more than doubled as India’s biggest producer of the alloy benefited from a one-time gain and earnings from outside its main business.
Net group income was 7.63 billion rupees ($119 million) in the three months to June 30, compared with 3.37 billion rupees a year earlier, the Mumbai-based company said on Tuesday. Sales fell 17 percent to 299 billion rupees.
Other income tripled to 7.62 billion rupees, including a gain of 6.97 billion rupees from the sale of investments, the Mumbai-based company said. Tata Steel also reported a one-time exceptional gain of 1.58 billion rupees, compared with an expense of 2.62 billion rupees a year earlier.
Steelmakers worldwide are contending with a rising tide of exports from China as demand in the top producer slows. The government’s devaluation of the yuan on Tuesday will probably add further momentum to overseas sales. Tata Steel shares slumped 54 percent over the past year.
“The Indian steel industry continues to bear the brunt of a surge in imports and tepid domestic demand, which led to a sharp drop in steel prices over the quarter,” T.V. Narendran, managing director of Tata Steel India and South East Asia, said in the statement.
Earnings before interest, taxes, depreciation, and amortization for the group fell 19 percent during the quarter. Deliveries declined 2 percent to 6.33 million metric tons, the company said. Profits at its Indian business declined 26 percent, while ebitda for the European operations slid 42 percent.
Tata Steel sold shares in Tata Projects Ltd. and two of its joint ventures in Europe during the quarter, it said. The company continues its strategy of selling non-core assets and raised about 10 billion rupees during the quarter by selling a part of its equity portfolio, Koushik Chatterjee, group executive director for finance, said in the statement.
The firm’s plan to cut debt by selling the loss-making business in Europe to Swiss investment firm Klesch Group fell through last week. Klesch Group Chairman Gary Klesch said the steel industry was “bleeding to death” because of the increase in Chinese shipments.
China devalued the yuan by the most in two decades earlier on Tuesday to bolster the economy by making exports more competitive. For shipments of commodities like steel, the yuan’s depreciation will add to the existing oversupply, according to Hong Sung Ki, an analyst at Samsung Futures Inc. in Seoul.
“Surging imports constitute a threat to European steelmaking,” Karl-Ulrich Koehler, managing director of Tata Steel in Europe, said in the statement. “Uncompetitive energy costs and the strength of Sterling are hurting our U.K. operations.”
Supply from China has grown at an “alarming rate,” and hot rolled coil shipments from the country have been arriving three times as fast as two years ago, hurting international steel prices, he said.
The earnings were announced after stock trading closed. Tata’s shares fell 5.5 percent to 246.80 rupees in Mumbai, compared with a 0.8 percent decline in the benchmark S&P BSE Sensex.