Tata Steel discloses Q2 losses due to provisions, impairment charges, and subpar UK performance.
According to a statement from the firm, TSE’s financial statements have been issued on a going concern basis, acknowledging the material uncertainty surrounding TSUK.
Tata Steel experienced a double blow because of impairment costs and declining margins in Europe, resulting in a combined revenue loss of Rs 6,511 crores in the subsequent quarter of 2023–24 as opposed to a profit on a net basis of Rs 1,297 crore the previous year.
The Tata group steelmaker announced late on November 1st, that its aggregated total revenue from operation was Rs 55,681 crore, down from Rs 59,877 crore during the same time last year.
Five experts surveyed by Moneycontrol said that although the street had predicted the company would declare a combined loss, it had estimated it at considerably smaller amounts at Rs 700 crore.
The India company produced an EBITDA of Rs 6,841 crore, with a greater margin of over 20%. In Europe, margins declined, particularly in the UK sector, while quarter-over-quarter (QoQ) activity in the Netherlands remained largely steady. Both regions had lower revenue per ton. The Netherlands’ reduced expenditures, however, resulted in roughly comparable margins, according to a statement from the Executive Director and chief financial officer Koushik Chatterjee.
Tata Steel’s shares ended at Rs 116.60 on the BSE on November 1st, down 1.8 percent compared to their previous close, ahead of the results.
According to the company, it has evaluated the possible effects of restructuring and the Electrical Arc Furnace route (EAF)-based decarbonization project at Tata Steel UK (TSUK). Afterwards, a charge for impairment of Rs 2,746 crore in the combined financial statements and Rs 12,560 crores in standalone financial accounts has been made. Tata Steel kept raising concerns about its European operations’ viability, pointing to insufficient funding and liquidity.
In the consolidated financial statements, Tata Steel has also assumed responsibility for restructure and other provisions totaling Rs 3,612 crore.
Following months of discussions to salvage the project, the UK government decided to award a £500 million grant to Tata Steel to help decarbonize its Port Talbot steel mill project in Wales, the firm announced in a statement. Tata Steel will be required to contribute the remaining sum to the £1.25 billion capital expenditure.
Compared to Rs 21,558.8 crores a year earlier, the Tata Steel Europe (TSE) reported sales of Rs 18,846.7 crores for the quarter.
Prior to the release of the data, analysts had noted that the company’s performance in Europe had been dismal because of lower shipments and lower realisations.