08 December 2008
Corporate News
Tata Steel consolidated results for first-half 2008-09

Tata Steel on December 2 issued consolidated financial results for the first half (H1) and the second quarter (Q2) of the 2008-09 fiscal year.

  • Group consolidated H1 turnover (net sales plus other income) rose to Rs. 878.44 billion (US$ 18.91 billion), up 38% from the first half of 2007-08 (H1 FY 08); Q2 turnover (net sales plus other income) rose to Rs 442.83 billion (US$ 9.53 billion), up 36% from the second quarter of 2007-08 (Q2 FY 08).
  • H1 EBITDA rose to Rs 154.29 billion (US$ 3.32 billion), up 59% from H1 FY 08; Q2 EBITDA rose to Rs 84.02 billion (US$ 1.81 billion), up 78% from Q2 FY 08.
  • H1 earnings before exceptional items and tax rose to Rs 114.77 billion (US$ 2.47 billion), up 114% from H1 FY 08: Q2 earnings rose to Rs 63.66 billion (US$ 1.37 billion), up 178% from Q2 FY 08.
  • ROIC (pre-tax) for the Group in H1 rose to 33% from 21% in H1 FY 08 and in Q2 to 36% from 20% in Q2 FY 08.
  • Total H1 deliveries/external sales rose 6% to 16.5 million tonnes; for the second quarter they dropped 3% to 7.8 million tonnes from 8.0 million tonnes in Q2 FY 08.

Financial results summary for the second quarter and first half

USD million

 

Q2FY09

Q2FY08

Highlights

H1FY09

H1FY08

Proforma

As reported

Proforma

As reported

7.8

8.0

8.0

Steel Deliveries (mm tons)

16.5

15.6

15.6

9,534

7,001

7,001

Turnover

18,912

13,739

13,739

1,809

1,015

1,015

EBITDA

3,322

2,085

2,085

19.0%

14.5%

14.5%

EBITDA margin

17.6%

15.2%

15.2%

247

220

220

Depreciation

485

438

438

177

295

295

Net Finance Charges

354

478

478

1,285

516

914

PBT

2,320

1,263

2,548

13.5%

7.4%

13.1%

PBT margin

12.3%

9.2%

18.5%

1,027

328

720

PAT after Minority Interest

1,867

852

2,089

10.8%

4.7%

10.3%

PAT margin

9.9%

6.2%

15.2%

1.25

0.44

0.99

Diluted EPS (not annualized)

2.26

1.05

2.98

Effective April 1 2008, actuarial gains or losses in pension funds of Tata Steel UK are being recognised in retained earnings in accordance with TSUK practice, in contrast to earlier practice up to March 31 2008 of recognising the gains or losses in the profit and loss account. For the purposes of comparison, the results of the previous year have been recast as if the current practice had been followed.

The financial numbers have been converted into US$ using the exchange rate of Rs 46.45 per US$ 1 for all comparable periods.

About Tata Steel Group

Tata Steel is a Global Top Ten steelmaker and the world’s second most geographically diverse producer. It is also the largest steel company headquartered in India.

The company employs more than 82,000 people and has its main steelworks in India, the UK, the Netherlands, Singapore and Thailand. Tata Steel Ltd became a Fortune Global 500 company this year and is part of the Tata Group. Tata Steel’s Vision is to achieve global steel industry benchmark status for Value Creation and Corporate Citizenship.

Tata Steel combines the experience and technical know-how associated with mature market operations with the exciting growth prospects that prominence in emerging markets affords. The company’s Asian and European operations both enjoy market-leading positions in the key steel consuming sectors of construction, automotive, white and yellow goods and packaging. Tata Steel is a leading player in the steel industry’s efforts to reduce its carbon footprint, using Innovation to develop new, eco-friendly products and prove up breakthrough production technologies.

Measures to deal with the economic downturn

The economic downturn is having different impacts on the company, depending on location. In India, Tata Steel’s relative strength in raw materials security is enabling it to maintain its planned production levels despite signs of a slowdown in consumption. This slowdown is not as pronounced as in some regions outside India.

During the first half Tata Steel commissioned its new ‘H’-blast furnace at Jamshedpur, the site’s largest so far. This was the most important element in the raising of crude steel production capacity at the plant from 5 million to 6.8 million tpy. The works has started work on the next phase of its expansion to 10 million tpy. A groundbreaking ceremony marking the start of construction of the ‘I’-blast furnace was held earlier this month.

The financial slowdown itself will not delay work on the Kalinganagar greenfield steel plant in Orissa. Site activities for the first 3 million tpy phase of this plant are due to start soon.

Tata Steel’s European plants have moved quickly to align output with reduced demand. Last month Corus decided to reduce its liquid steel production in the October 2008-March 2009 period by 30%. To achieve this it has announced plans to temporarily idle one blast furnace at each of its Scunthorpe and Port Talbot plants in the UK and its IJmuiden plant in the Netherlands.

In addition Corus has embarked on a cost-cutting programme designed to enable it to weather the storm. So far £350 million of cost reductions in the fiscal second half of 2008-09 have been identified and more are likely to emerge. Much of this achievement is coming from using the options available to the company to optimise the utilisation of assets, redeploy staff, eliminate overtime and work flexible hours. Through measures such as these the company is determined to emerge from the crisis fit for the future.

However, redundancies have been necessary in Corus’ UK and Ireland Distribution business. Besides, Corus Tubes also last week announced that it will make a total of 146 people redundant in the UK and the Netherlands.

NatSteel has reduced its production in selected geographies, while Tata Steel Thailand has reduced its output by 25%.

Raw materials strategy

Tata Steel has a strategy to increase the proportion of captive raw materials in its sourcing from the current group-wide level of around 22% by acquiring sources of supply in coking coal and iron ore that will primarily feed its European operations.

In pursuance of its raw materials interests Tata Steel has since April 2008 announced its participation in a large expansion of the Carborough Downs coking coal joint venture in Australia, and invested in New Millennium Capital Corp. The latter investment gives Tata Steel exclusive rights to an 80% stake in New Millennium’s Direct Shipping Ore project in eastern Canada.

For investor enquiries contact:                     
Mr. Sandip Biswas                                                 
Tel : + 91 22 6665 7328/7298                             
e-mail : sbiswas@tata.com

Mr. Praveen Sood          
Tel : + 91 22 6665 7306                           

For media enquiries contact:
Mr. Sanjay Choudhry
Tel : + 91 657 243 1142           
e mail: sanjay.choudhry@tatasteel.com
  
Mr. Bob Jones         
Tel : + 44 207 717 4532        
e- mail: bob.jones@corusgroup.com

Categories