Tata Steel Europe has moved forward in its plan to shape its European business, announcing Wednesday that it would cut 1,600 jobs in the Netherlands, 1,000 jobs in the UK and 350 elsewhere in the world.
In a statement, the company did not yet specify which of its facilities will be hit by the cuts.
Tata Steel’s Europe CEO Henrik Adam said the company “cannot afford to stand still” as “the world around us is changing fast and we have to adapt”.
When the announcement was done two weeks ago, Tata Steel said that the transformation” program would have involved 3,000 job losses out of a total of about 21,000 employees in the region. The company has major steelmaking sites in the UK and the Netherlands.
In a bid to improve financial performance, Tata also expects to increase its sales of higher-value steels, optimize production processes and reduce its procurement costs.
Through its proposed transformation program, Tata Steel is initially targeting a positive cash flow by the end of its financial year ending March 2021. It is also aiming for an EBITDA margin of around 10% throughout the market cycle. Based on full-year 2019 revenue figures, this would equate to £750 million in EBITDA. With improved earnings and cash flows, Tata Steel Europe will be a financially self-sustaining business.
In the first six months of its current financial year (starting April 2019), Tata Steel Europe reported a drop of 90% in EBITDA to £31 million. Revenue was £3.25 billion.
Tata Steel plans to meet with the European Works Council in the coming weeks to discuss further details. The next meeting is scheduled in two weeks from Wednesday, a Tata spokesman told S&P Global Platts.
