Weak European ops dent Tata Steel profit

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₹633.95 crore. The figure, however, marked a 63% fall from the March quarter. Tata Steel said its profitability was hit by non-cash deferred tax charge on account of a buy-in transaction at the British Steel Pension Scheme (BSPS).

However, with this, the insurance buy-in of BSPS has been completed, successfully derisking Tata Steel UK. This is considered positive for the future prospects of the company’s European operations. Revenue at Tata Steel Europe fell 18% from a year earlier to ₹21,335 crore and 3.18% sequentially.

However, it reported Ebitda, or earnings before interest, taxes, depreciation, and amortization, loss of ₹1,569 crore in the quarter, compared with an Ebitda profit of ₹6,037 crore a year ago. Ebitda per tonne loss also widened to ₹7,890 from ₹7,610 in the previous quarter. Notably, the year-ago quarter had seen Tata Steel Europe report robust Ebitda per tonne of ₹28,220.

Steady decline in steel prices, weak demand in Europe and globally as well as high energy costs are taking a toll on the company’s European profitability. The planned relining of BF6 (blast furnace) at Tata Steel Netherlands commenced in April and this led to a drop in crude steel production. Steel sales volume at 1.99 million tonne (mt) also fell from 2.14 mt sequentially and 2.16 mt a year earlier.

The operating performance for India operations (Tata Steel Standalone and Tata Steel Long Products), however, remained much stronger. The reported Ebitda per tonne at ₹15,651 didn’t decline much from ₹15,715 in the previous quarter, despite a rise in coal costs and also declining volumes. Nevertheless, Ebitda per tonne was much lower than ₹23,557 a year earlier.