Tata Steel investors may remain jittery amid delayed revival in European operations
Subscribe to enjoy similar stories. The September quarter (Q2FY25) earnings of Tata Steel Ltd had its share of positives even as European operations remain a drag. Consolidated Ebitda of ₹5,522 crore adjusted for forex translation, rose 33% year-on-year.
Profitability improved despite a drop in realization. It was aided by a sharp decline in raw material prices as well as higher volumes. Ebitda is earnings before interest, tax, depreciation and amortization.
On a standalone basis (domestic operations), Ebitda fell 4.3% year-on-year to ₹6,734 crore, primarily impacted by lower steel realizations. Realization during the quarter was lower because of a significant increase in exports from China. Even so, its domestic operations are on relatively decent footing, while losses in the UK remain a niggling worry for investors.
In Q2FY25, UK business remained in the red with Ebitda loss of ₹1,589 crore, increasing from ₹1,367 crore in the same quarter last year. The company’s UK business is going through a structural shift necessitated by a high-cost operating structure and stringent environment regulations. The last blast furnace at the facility was shut down during the quarter and the process of building an electric arc furnace-based steel making has been started.
The company has signed the final agreement with the UK government which would provide £500 million out of the total project cost of £1,250 million. It is also in the process of bringing down its headcount, made redundant with the closure, involving a separation cost of about £150 million. The company would be saving about £100 per tonne from lower labour cost and other overheads after the process is completed by June, the management said.
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