Despite domestic production volumes growing 7%, Tata Steel’s revenue fell over 3% to 553.12 billion rupees on account of weak domestic steel prices
India’s Tata Steel reported a third-quarter profit on Wednesday, as declining expenses more than offset lower revenue due to weak domestic prices.
Subdued local prices due to cheaper shipments from top producer China hurt the country’s steelmakers in the October-December period, despite sustained domestic demand.
The quarter partly coincided with an eight-month period when Chinese steel shipments reached 5-year high, turning India into a net importer.
The company posted a consolidated net profit of Rs 513 crore ($61.8 million) compared to a year-ago loss of Rs 2,224 core.
Despite domestic production volumes growing 7%, Tata Steel’s revenue fell over 3% to Rs 553 crore on account of weak domestic steel prices.
However, expenses slipped nearly 7%, as costs of raw materials fell more than 22%. Analysts at Antique Broking said higher prices of coking coal prices, a key steel-making ingredient, is factoring in with a lag.
“During this quarter, China exported between 7 to 8 million tons of steel every month, which is the highest since 2015 and this has adversely impacted global steel prices as well as profitability,” CEO T V Narendran said in a statement.
The company also took restructuring and employee separation compensation charges of Rs 313 crore and Rs 236 crore in the quarter, respectively.
The charges are in relation to a deal it signed last September with the British government to decarbonise its Port Talbot site, which would axe up to 2,800 jobs.
The company is aware of the impact of its proposal to wind down Port Talbot on individuals and the local community, it said.
Shares of Tata Steel ended nearly 4% higher ahead of results.
First Published: Jan 24 2024 | 8:20 PM IST
