Tata Steel Flags $1.6 Billion Writedown on Weak Europe Demand
Demand in Europe has fallen by almost 8 percent in the year ended March 31, Mumbai-based Tata said yesterday in a statement. Weaker economic and market conditions in Europe are expected to continue in the near and medium-term, leading to a cut in expected cash flows and the valuation of the company’s European business, Tata said.
Steelmakers in Europe are grappling with excess capacity, falling prices and rising operating costs. The region has capacity to make about 210 million metric tons of steel a year, while demand in a “normal market” is 150 million to 160 million tons, industry lobby group Eurofer said in July last year.
Tata is due to announce full year results on May 23. The company is considering selling some of its U.K. assets as a weakening economy erodes demand leaving factories underutilized, two people with knowledge of the matter said last month. Selling the U.K. units, acquired as part of a $12 billion takeover of Corus Group Plc six years ago, would help Tata cut debt, the people said.
Tata fell 4.1 percent to 305.6 rupees at the close of trading in India yesterday. Its stock has declined 25 percent over the past year.
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