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Tata Steel returns to profit in Q2, but misses analyst estimates

30 October 2017

Tata Steel Europe -Sales volumes may increase 15 percent YoY and 8 percent QoQ at 2.6 million tonne -European operations are expected to post yet another good quarter -EBITDA per tonne is expected to cool off QoQ by 8 percent at Dollars 73 per tonne but may increase 7 percent YoY.

Liquid steel production of 2.6 million tons in the second quarter of the company's financial year was 3% down on the same quarter a year ago.

Tata Steel, however, managed to meet revenue estimates by reporting a 19.7% jump from the year-ago period to Rs 32,464.1 crore.

The company's consolidated margin was 14.5 per cent against 11.8 per cent previous year.

During July-September 2017, total expenses of the company were also higher at Rs 30,566.68 crore as compared to Rs 26,866.49 crore a year ago.

In the backdrop of slack economic growth, deliveries for India operations grew 17 per cent year-on-year (YoY) and 12 per cent quarter-on-quarter to 3.08 million tonnes for the period under consideration.

"During the quarter, Tata Steel signed a MOU with Thyssenkrupp which marks a major milestone for Tata Steel group with regard to wider European portfolio strategy".

The company has posted net profit of Rs.1938.87 crores for the 6 months period ended September 30, 2017 as against net loss of Rs.(3232.45) crores for the 6 months period ended September 30, 2016. Sequentially, however, this was lower from the Rs 4,939 crore in the June quarter, "due to seasonally weaker performance in our European operations", said Chatterjee. We have also completed the Regulatory Apportionment Agreement in respect of BSPS. Gross debt increased by ₹2,447 crore to ₹90,259 crore largely due to increase in working capital and currency movement. The company said it developed 27 new products across segments in the year. This, coupled with an uptick in the raw material prices has lifted steel prices across most regions.

Tata Steel Group revenues witnessed a sequential growth of 9 per cent primarily driven by increased volumes across the geographies, with India now contributing to 48 per cent of overall deliveries, he said. "The capital expenditure for the quarter was around Rs 1,834 crore", he added. The EBITDA (earnings before interest, taxes, depreciation and amortisation) margin rose a smart 272 basis points to 14.72 per cent driving up the consolidated EBITDA by a hefty 53 per ent y-o-y.

"This has been made possible by new products we have brought to market".

Tata Steel returns to profit in Q2, but misses analyst estimates