Tata Steel Q1 results: Net profit plunges 92% but still beats estimates

Tata Steel reported a 92 per cent fall year-on-year (YoY) in its consolidated net profit (attributable to the owners of the company) for the June 2023 quarter (Q1FY24).

Profitability took a hit due to non-cash one-time charges on the British Steel Pension Scheme, said the company.

Net profit was Rs 633.95 crore and revenue from operations Rs 59,489.66 crore, 6 per cent lower from a year ago.

On a sequential basis, Tata Steel’s net profit fell 63 per cent from Rs 1,704.86 crore.

Reported net profit was Rs 524.85 crore, down 93 per cent YoY.

“Profitability was affected by non-cash deferred tax charge on account of buy-in transaction at the British Steel Pension Scheme. With this, the insurance buy-in of BSPS has been completed, successfully de-risking Tata Steel UK,” Tata Steel said in its press statement.

In a Bloomberg poll, 11 analysts had estimated a loss of Rs 122 crore and a revenue of Rs 56,337 crore.

Earnings before interest, taxation, depreciation, and amortisation (Ebitda), the company said, was Rs 6,122 crore and the Ebitda margin was 10 per cent.

India operations

Revenue from India operations was Rs 34,901 crore, up 3 per cent YoY. The company said India revenue decreased sequentially on lower volumes, partly offset by higher net realisations.

Ebitda for India operations were down 22 per cent at Rs 7,514 crore.

“During the quarter, global economic recovery continued to face headwinds, affecting commodity prices, including steel. In India, domestic steel demand continued to grow and was up around 10 per cent on a YoY basis but steel spot prices moderated in line with global cues,” said T V Narendran, chief executive officer and managing director.

Tata Steel Europe

Revenue from Europe operations was down 18 per cent YoY at Rs 21,335 crore. The business reported an Ebitda loss of Rs 1,569 crore, compared to an Ebitda of Rs 6,037 crore a year ago. The Ebitda loss was narrowed sequentially.

The company does not disclose a separate financial performance metric for Tata Steel UK. In its commentary on the ongoing discussions with the UK government for a financial package to green its steel-making facilities in that country, Tata Steel said: “Based on the initial and subsequent discussions it remains uncertain whether adequate support for the decarbonisation strategy would be agreed.”

The company said there was uncertainty surrounding the impact of such adversities on the financial situation of Tata Steel UK.

Tata Steel’s other income in Q1FY24 jumped to Rs 1,176 crore from Rs 268 crore in the corresponding quarter a year ago. The company attributed the rise to a long-term lease agreement with Tata BlueScope with respect to colour-coated lines at the Angul and Khopoli units.

Capital expenditure for the quarter stood at Rs 4,089 crore and net debt Rs 71,397 crore.