Tata Steel’s Q3 profit rises ninefold year-on-year to Rs 2,730 crore on rise in Dutch units

Tata Steel’s consolidated net profit rose more than nine times from a year earlier in the December quarter, as a sharp improvement in profitability at its Dutch operation and stable operations in India helped offset higher operating losses in Britain.The country’s second-largest construction material maker posted a consolidated net profit of Rs 2,730 crore for the three months ended December 31, compared to Rs 295 crore a year earlier. Consolidated revenue from operations increased to Rs 57,002 crore from Rs 53,648 crore.

Earnings before interest, tax, depreciation and amortization or Ebitda rose 39% year-on-year to Rs 8,309 crore, while Ebitda on every tonne of steel sold rose to Rs 10,116 from Rs 7,759 a year ago, according to a company statement.“Our global operating environment continues to be determined by tariffs, geopolitical shifts and policy differences,” said TV Narendran, CEO of Tata Steel. “Steel markets were impacted by increased exports of finished steel from China, which exceeded the 2015 peak at 119 million tonnes.”

Tata Steel’s performance against this backdrop was “strong”, Narendran said, with the company surpassing six million tonnes of domestic steel deliveries, a record for a quarter. For overseas operations, supportive policy frameworks are “critical” for the transition to a more sustainable business model, he said.

“While recent progress in Europe has supported sentiment, the UK market remains depressed and the quota framework needs to be revised to reflect underlying market conditions,” Narendran said.

Despite the challenging operating environment, Tata Steel has reduced its consolidated net debt from Rs 87,040 crore to Rs 81,834 crore as of September-end. In the December quarter, Rs 3,291 crores were spent on capital expenditure. “Our cost transformation program, focused on multiple levers including operational KPIs, supply chain efficiency and procurement, has delivered savings of approximately Rs 3,000 crores for the quarter and approximately Rs 8,600 crores for the first nine months of the financial year,” said Koushik Chatterjee, Chief Financial Officer.

REGIONAL PERFORMANCE
Tata Steel’s mainstay India operations saw profit decline slightly to Rs 3,823 crore from Rs 3,865 crore a year ago. Although deliveries increased during the quarter from the previous year, lower steel prices and provisions for new labor laws weighed on profits.

In the Netherlands, Tata Steel posted an Ebitda of Rs 570 crore, compared to a net loss of Rs 9 crore in the year-ago period, while in Britain, its operating loss widened from Rs 730 crore to Rs 742 crore.

Ahead of the earnings, shares of Tata Steel closed almost unchanged at Rs 197.05 apiece on the BSE.