Tata Steel Returns to Profit on Higher Demand And Tax Benefit
Group net income, including that of unit Tata Steel Europe Ltd., was 9.17 billion rupees ($145 million) in the three months ended Sept. 30, compared with a 3.64 billion rupees loss a year ago, according to an exchange filing. The median profit of 25 analyst estimates compiled by Bloomberg was 3.3 billion rupees. Net sales at Mumbai-based Tata Steel, which had a tax benefit of 3.9 billion rupees, gained 7.4 percent to 363.7 billion rupees.
Consumption improved in Europe, which accounts for two-thirds of Tata Steel’s output, while higher production in India helped boost sales. Tata Steel sold 2.04 million metric tons of the alloy, or 18 percent more, from its Indian operations in the quarter, while sales in Europe rose 1 percent to 3.46 million tons. Group shipments rose 6.7 percent to 6.48 million tons from a year earlier and gained 10 percent over the previous quarter.
ArcelorMittal (MT), the world’s biggest steelmaker, said Oct. 18 it expects to see a rebound in European auto production next year as the continent’s consumers buy more family cars. European monthly car sales rose the most in more than two years in September as the end of a recession in the region and price cuts helped boost purchases.
The European PMI survey crossed a level of 50 in July for the first time in two years. That signifies an expansion of manufacturing compared with the previous month.
Total expenses at Tata Steel rose 3.7 percent to 343.8 billion rupees in the quarter, while raw material expenses climbed almost 10 percent to 115.7 billion rupees.
Tata Steel shares, which have slumped 17 percent this year, rose 1.5 percent to 357.75 rupees in Mumbai today. The earnings were announced after trading closed.
The company said on Oct. 29 it will cut 500 mainly management and administrative jobs in the U.K. to lower costs. Jobs will go in Scunthorpe, Teesside and Workington, the company had said in a statement.
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