OREANDA-NEWS. February 10, 2012. Tata Steel group performance highlights

The Tata Steel group recorded profit after tax (after minority interest and share of profit of associates) of Rs4,956 crore (USD 934 million) during the first nine months of the financial year 2011-12 (9M FY12) compared to a profit of Rs4,807 crore (USD 906 million) in the first nine months of the financial year 2010-11 (9M FY11). The group registered a net loss of Rs603 crores (USD 114 million) in Q3 FY12 compared to a net profit of Rs1,003 crore (USD 189 million) in Q3 FY11.

The group EBITDA in 9M FY12 was Rs13,242 crore (USD 2.5 billion), compared to Rs12,399 crore (USD 2.34 billion) in 9M FY11. EBITDA in Q3 FY12 came in at Rs1,940 crore (USD 366 million), compared to Rs3,374 crore (USD 636 million) recorded in Q3 FY11. The group consolidated turnover in 9M FY12 was Rs98,901 crore (USD 18.64 billion), up from the Rs84,929 crore (USD 16.01 billion) recorded in 9M FY11. The consolidated turnover for Q3 FY12 was Rs33,103 crore (USD 6.24 billion), compared to the Rs29,089 crore (USD 5.48 billion) in Q3 FY11.

The group’s steel deliveries in 9M FY12 rose by 0.8 per cent to 18.01 million tonnes compared to 17.86 million tonnes in 9M FY11. Steel deliveries in Q3 FY12 fell slightly to 5.84 million tonnes from 5.9 million tonnes in Q3 FY11.

Net debt at the end of December 2011 was Rs50,528 crore (USD 9.52 billion) compared to Rs46,627 crore (USD 8.79 billion) at the end of March 2011.

Turnover in Tata Steel India in 9M FY12 increased by 16.1 per cent to Rs24,454 crore (USD 4.61 billion) from Rs21,056 crore (USD 3.97 billion) in 9M FY11. Q3 FY12 sales of Rs8,382 crore (USD 1.58 billion) were up by 13.3 per cent from the Rs7,397 crore (USD 1.39 billion) of Q3 FY11, and up 2.1 per cent from the Rs8,212 crore (USD 1.55 billion) of Q2 FY12.

EBITDA in 9M FY12 at Rs9,053 crore (USD 1.71 billion) was slightly down by 1.1 per cent from Rs9,158 crore (USD 1.73 billion) in the previous year. Q3 FY12 EBITDA of Rs2,604 crore (USD 491 million) was down by 8 per cent from the Rs2,832 crore (USD 534 million) of Q3 FY11, and down by 6.8 per cent from the Rs2,793 crore (USD 526 million) of Q2 FY12. The 9M FY12 EBITDA margin was nevertheless healthy at 37 per cent.

Turnover in Tata Steel Europe in 9M FY12 increased by 18.9 per cent to Rs62,230 crore (USD 11.73 billion) from the Rs52,356 crore (USD 9.87 billion) in 9M FY11. Q3 FY12 sales of Rs20,535 crore (USD 3.87 billion) were 17.2 per cent up from the Rs17,523 crore (USD 3.3 billion) of Q3 FY11, but down 3.0 per cent from the Rs21,160 crore (USD 3.99 billion) of Q2 FY12.

EBITDA for 9M FY12 came in at Rs1,631 crore (USD 308 million), down by 37.9 per cent from Rs2,626 crore (USD 495 million) in 9M FY11. There was an EBITDA loss of Rs781 crore (USD 147 million) in Q3 FY12, compared to positive EBITDA of Rs392 crore (USD 74 million) in Q3 FY11 and Rs505 crore (USD 95 million) in Q2 FY12. The Q3 FY12 loss was mainly due to mark-to-market provisions on stock.

The 2.9 mtpa brownfield expansion in Jamshedpur is expected to be commissioned in Q4 FY12.

Financial performance analysis

Consolidated financial results summary (under Indian GAAP) for the nine months ending December 2011.

All figures in USD  million, unless specified

All figures in USD million, unless specified 9M FY12

9M FY11

Highlights

Q3 FY12

Q3 FY11

Q2 FY12

18.01

17.86

Steel deliveries (Mn tons)

5.84

5.9

6.12

18,639

16,006

Turnover

6,239

5,482

6,181

2,496

2,337

EBITDA

366

636

555

13.4

14.6

EBITDA margin (%)

5.9

11.6

9.0

645

612

Depreciation

219

212

209

407

378

Net finance charges

133

140

135

1,403

1,334

Profit before taxes (after exceptional items)

(3)

296

197

7.5

8.3

PBT margin (%)

(0.05)

5.4

3.2

934

906

Profit after taxes, minority interest and share of associates

(114)

189

40

5.0

5.7

PAT margin (%)

(1.8)

3.4

0.6

For the purposes of converting all financial numbers into USD  for all comparable periods, a USD /Rs exchange rate of 53.06 has been used throughout this document.

Executive comment

ata Steel managing director HM Nerurkar said: "Our Indian operations delivered steady performance during the last quarter, with flat product volumes increasing 3 per cent year-on-year. Long product volumes dropped marginally due to planned shutdowns, but we increased our market reach, recording our highest-ever quarterly retail long products sales. Company-wide cost saving measures benefitted margins in an otherwise difficult market. We expect steel demand to improve on expectations of the RBI relaxing monetary policy to aid growth and investment. An improvement in operating performance, coupled with a number of new marketing initiatives, should increase profitability at the South East Asian operations". €

Tata Steel Europe MD and CEO Dr Karl-Ulrich Kohler said: "The December quarter marked the height of the cyclical cost price squeeze. Tata Steel was one of the first steel companies in Europe last year to start adjusting its output and configuration to the slowdown in the recovery. The turnaround programme in our long products business is well on course for completion by the end of the financial year, as planned. Similar measures have been taken elsewhere in the company, most recently at some of our tubes operations in the Netherlands and the UK. Through our Step Up & Save initiative we are accelerating cash conservation in expectation of muted but stable demand in our core markets in 2012."€

Financing developments

On January 20, 2012, Tata Sons exercised the option to convert 12 million warrants into ordinary shares of the company at a price of Rs594 per share. The committee of directors, at its meeting held on January 20, 2012, approved the allotment of 12 million ordinary shares of Rs10 each at a premium of Rs584 per share to Tata Sons.