Turnaround sees Tata Steel return to profit and beat estimates

Consolidated net profit for July to September was 9.17 billion rupees, compared with a loss of 3.64 billion rupees a year earlier, it said yesterday.

Net sales at the company rose 7.4 per cent to 363.7 billion rupees.

Analysts were expecting a profit of 3.67 billion rupees on revenue of 332.74 billion rupees, according to Thomson Reuters.

The company said that “the positive momentum in earnings continued even in a seasonally weak period”.

Net profit for the first half of this year was 20.56 billion rupees compared to 2.34 billion rupees in the first half of last year.

Tata Steel said: “This turnaround was driven by the steady ramp-up of the Indian operations and improved performance at the European and South East Asian operations.”

Koushik Chatterjee, group executive director (finance and corporate), said: “The Tata Steel Group continued to maintain its earnings momentum in spite of seasonal weakness in Europe.”

Tata Steel has four main sites in South Yorkshire.

Its speciality steels business has two sites in Rotherham and one in Stocksbridge, Sheffield. It also has an R&D facility in Rotherham. Tata Steel also has a steelworks site in Scunthorpe, North Lincolnshire.

At the end of October, Tata Steel announced that around 340 jobs would be axed at the steelworks in Scunthorpe because of weak demand in the construction industry.

The Scunthorpe site will bear the brunt of 500 job losses across three sites, with 90 posts in Workington and 40 in Teesside also set to be lost.

Tata said the planned cuts were being made amid a prolonged downturn in demand for some of the key products made by the Scunthorpe-based “long products” business, including the UK market for construction steel, which is about half of 2007 levels.

Karl Koehler, chief executive of Tata Steel’s European operations, said at the time of the announcement: “European steel demand this year is expected to be only two-thirds of pre-crisis levels after falls in the past two years.

“On top of the challenging economic conditions, rules covering energy and the environment in Europe and the UK threaten to impose huge additional costs on the steel industry.

“As difficult as the proposed changes are, they are intended to build a stronger future.”