The steel maker’s net profit fell 91.8 percent to Rs 633.95 crore in the quarter ended June. That compares with a net loss of Rs 122.3 crore estimated by analysts tracked by Bloomberg.
Net profit declined due to an increase in inventory costs of Rs 9,500 crore, partially offset by 8% year-on-year growth in consolidated steel volumes at 7.04 million tonnes.
This increase in inventory costs was primarily due to an inventory drawdown in its Europe segment. Higher cost coking coal consumption also increases the cost of inventory as a result of inventory delays.
Consolidated EBITDA fell 64.6% yoy to Rs 8,116 per tonne.
Tata Steel India’s revenue grew 1% year-on-year, with India sales volume up 17.9% year-on-year to 4.8 million tonnes.
Weak demand pickup in Europe led to a 17.8% year-on-year decline in revenue in this geography, with a 7.9% decline in delivery volume to 1.97 million metric tons. Crude steel production fell 25.8% year-on-year to 1.81 million tonnes as Tata Steel started relining a blast furnace in the Netherlands in April.
Tata Steel Europe’s profitability was hit by a non-cash deferred tax charge on its buy-in deal in the British Steel Pension Scheme, which led to a Rs 7,600 crore decline in its operating income. However, the insurance buyout of BSPS was completed this quarter, completely mocking Tata Steel UK, the primary sponsor of the pension scheme.
“We continue to progress on our sustainability journey, with multiple initiatives underway that calibrate to each operating location,” said T V Narendran, Chief Executive Officer and Managing Director, Tata Steel. “We are engaged in discussions with technology providers and the government to switch to greener steel.”
Shares of Tata Steel fell 1.16% on Monday ahead of its first-quarter results, while the benchmark Nifty 50 fell 0.37%.