Tata Steel Ltd. suffered a third straight quarterly loss as sales fell amid the economic disruptions caused by the Covid-19 pandemic.
Net loss of India's oldest steelmaker stood at Rs 4,373.6 crore in the quarter ended June compared with a profit of Rs 693 crore in the year-ago period, according to an exchange filing. Analysts' estimates compiled by Bloomberg had pegged the loss at Rs 2,276.8 crore.
- Revenue fell 32.4% year-on-year to Rs 24,288.5 crore—higher than the estimated Rs 23,542 crore.
- Adjusted operating profit fell 81.2% to Rs 1,038 crore—an 18-quarter low.
- Margin narrowed to 2.1% from 14.9% earlier.
Steel mills suffered as India's lockdown to contain the pandemic halted production. The slump in demand for the alloy deepened as new construction and purchases of cars and houses were delayed, causing a price slump. That hurt Tata Steel, too, which saw sales in India fall 26% during the quarter compared to last year. Production also fell 33.5% during the same period.
Besides, the pandemic-hit wasn't contained to its India business. The cash-draining European division, which Tata is looking to hive off, saw sales slump, adding to the steelmaker's woes. “Tata Steel Europe performance was affected by lower deliveries and sharp decline in European spreads to an unsustainably low level,” Chief Financial Officer and Executive Director Koushik Chatterjee was quoted as saying in a media statement.
The steelmaker, however, has stepped up operations at its plants in India since lockdown restrictions were eased. “In India, we have ramped up our capacity utilisations to 90% levels with total sales in June exceeding FY20 average monthly sales,” Chief Executive and Managing Director TV Narendran was quoted as saying in the statement. “We're further ramping up capacity utilisation and increasing domestic sales which will lead to an improvement in our margins in coming quarters.”
“While the risk of further Covid-19 outbreaks remains, we are cautiously optimistic that the worst is behind us,” he said.
Shares of Tata Steel fell 0.3% ahead of the results announcements, compared with a flat Nifty 50 Index.
(Updates an earlier version to restate Ebitda number after factoring in the impact of exchange rate movement on the fair value of Tata Steel's investments.)
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