Net Profit of Tata Steel Doubles to £15.32 billion

Tata Steel’s net profit for the quarter ended in June 2018 (first quarter of the fiscal year 2018-19) more than doubled to 15.32 billion GBP when compared to the last year's profit recorded in the same quarter following a higher than expected performance of the Indian steel business.

Company's revenue increased over 18 per cent to 128.48 billion GBP, the company said on Monday (13).  The company had recorded a profit of 7.22 billion GBP in the April-June quarter, last year.

Total deliveries grew by 7.9% year-on-year basis (YoY) to 2.97 million tons in the first quarter of the financial year 2018-19; domestic deliveries grew by 13.7 per cent YoY, much stronger than 9.2per cent YoY overall steel demand growth in India.

The volume growth was broad-based and across segments despite a seasonally weaker period. Automotive segment sales increased by 49.5 per cent YoY; Branded products, retail and solutions segment sales grew 11.6 per cent YoY. Industrial products and projects segment sales grew 36.6 per cent YoY with 67.6% YoY growth in engineering sub-segment. Total revenues increased 13.8 per cent YoY to 128.62 billion GBP.

T V Narendran, CEO, Managing Director at Tata Steel, said “Tata Steel delivered strong performance across all geographies on the back of strong steel demand and buoyant spreads. Tata Steel India domestic deliveries grew by 14 per cent YoY, significantly higher than the market which saw a 9 per cent YoY growth. All verticals saw strong growth, with our Automotive and Branded Products segments now contributing to 19 per cent and 33 per cent of total volumes, respectively. Tata Steel Europe also saw stronger profitability with an improvement in spreads and operational performance.”

“We continue to execute our strategy of expanding our footprint in India. Our Kalinganagar Phase 2 expansion is progressing well, with work starting on the Cold Rolling Complex. Our Bhushan Steel acquisition is another significant milestone in our growth plans and we are confident that it will add significant value to our portfolio. We are working on seeking all relevant approvals for our 50:50 JV with ThyssenKrupp for our European business and look forward to a strong and sustainable European business,” he added.

Koushik Chatterjee, Executive Director and CFO at Tata Steel said, “The performance of Tata Steel in this quarter has been very strong and Tata Steel India delivered a stand out performance of 31 per cent Earnings before interest, taxes, depreciation, and amortization (EBIDTA) margin on the back of strong underlying business performance and improved market conditions.”

“During the quarter, Tata Steel also successfully closed the acquisition process of Bhushan Steel under the Insolvency and Bankruptcy Code process with a transaction structure that provides us close to 100% economic interest in the company. The funding for the acquisition was designed with a prudent capital structure with a significant equity component to ensure future value creation. The integration of the company is underway and is expected to deliver synergies over the next 24 months,” Koushik Chatterjee added.