Tata Steel Netherlands reported dramatically improved profitability in the June quarter, despite higher raw material cost, while production and deliveries also rose, Kallanish notes.
Deliveries rose 7% on-year and 3% on-quarter to 1.47 million tonnes after the reline of BF6 was completed. Liquid steel output rose 80% from a year earlier and was up 14% on the March quarter to 1.69mt.
Revenue fell 6% from a year earlier but rose 2% on-quarter to INR 14,167 crores ($1.69 billion), while raw material cost was higher on increased coking coal and iron ore consumption cost. Change in inventories was negative on stock build-up during the quarter.
Ebitda was nevertheless at positive INR 453 crores versus losses each a year and quarter earlier, thanks to the stabilisation of operations.
EU steel spot spreads witnessed a decline exceeding 10% during the quarter, Tata Steel says in a presentation. EU steel demand was subdued, with construction and machinery being adversely impacted by high interest rates. Steel imports remained high and led to the European Commission extending safeguards with additional measures.
At Tata Steel UK, deliveries and profitability declined in the June quarter, while raw material cost increased significantly.
Deliveries fell 9% on-year and were flat on-quarter at 680,000t, while liquid steel production slumped 20% from the previous year to 680,000t, but this was up 3% on-quarter.
Revenue fell 12% on-year and was flat on-quarter at INR 6,810 crores ($813 million), while raw material cost surged over 30% in each case due to increased purchases of finished and semi-finished goods. The decline in change in inventories deepened. Ebitda loss more than doubled on-year and on-quarter to INR 955 crores.
Given the planned closure of blast furnaces in the UK, there was a steel stock build-up for the downstream operations which impacted working capital, says Tata Steel chief financial officer Koushik Chatterjee. “We are proceeding as per previously announced timelines for the closure of the [Port Talbot] heavy end,” he adds. “We are working closely with the recently elected UK government on finalisation of grant funding process for the new electric arc furnace project.”
Tata closed blast furnace no.5 at Port Talbot in early July and plans to close BF4 by end-September.
Adam Smith Poland
