MUMBAI: India’s Tata Steel Ltd looked to reviving European demand and infrastructure investment by the Indian government to boost sales in coming quarters after posting higher sales but a drop in net profit for April-June yesterday.
Net sales rose 11 percent to Rs361.43bn in the quarter to end-June, helped by a surge in European demand. The figure was in line with expectations for Rs361.16bn.
Tata Steel’s European business, the result of its $13bn acquisition of Britain’s Corus in 2007, contributed roughly 57 percent to its total steel production of over 27 million tonnes in the last fiscal year to end-March.
“Though demand remains well below levels we would regard as healthy, we can see greater stability emerging in the markets we serve,” Karl-Ulrich Kohler, chief executive of Tata Steel Europe said, referring to the demand in the European region. The management of Tata Steel, a unit of India’s Tata conglomerate, has been cutting costs and focussing on high-margin products to boost sales in Europe to cope with softness in the region’s economy.
ArcelorMittal SA, the world’s largest steelmaker, also lifted its demand forecasts for Europe and for the United States this month, highlighting strong automotive and machinery sector demand.
Tata Steel’s fiscal first-quarter profit fell by 70 percent to Rs3.37bn ($55m), hurt by a Rs15.7bn impairment on its 35 percent stake in the Benga coal mines in Mozambique.
Analysts on average had expected Tata Steel to post a profit of Rs12.21bn. The steel firm had to take the hit after Rio Tinto, owner of the other 65 percent, agreed to sell it and other projects in Mozambique’s Tete province, which it had bought via a $4bn acquisition of Riversdale Mining in 2011, for just $50m.
Reuters
