Tata Steel Q2 net profit slumps 87% on-year, misses estimates

Tata Steel has reported July-September 2022 earnings way below expectations, hurt by lower demand and soaring expenses. Here are the major highlights: 

Tata Steel July-September 2022: Highlights

Profits tanked: Tata Steel, India’s steel manufacturing giant has reported a slump of 87% in its consolidated profits in the 2nd quarter of FY23 on a YOY basis. During the same quarter last year, the profits were around Rs. 11918 crores which tanked to Rs. 1514 crores (PAT) in the quarter that ended on September 30th 2022. 

Revenue remained flat:  The consolidated revenue of the steelmaker hasn’t decreased much in this quarter compared to the same period last year. The revenue stood at Rs. 59,877.5 crore in Jul-Sep 2022 while it was Rs. 60.282.78 crores in Q2FY22. 

While the consolidated revenue remained flat compared to last year's September quarter, the decreasing profits are a result of the economic slowdown across the world and high inflation which has increased the cost of raw materials. The profits have come down also due to the poor operational performance of the company. 

Expenses doubled: The consolidated cost of raw materials has almost doubled from the last year during the same quarter. While it was Rs. 18132.73 crores during Q2FY22, now it stood at Rs. 27976.56 crores in Q2FY23. This has primarily impacted the profits of the company. 

Business in India and Europe: Though the consolidated revenue remained flat on a YOY basis the sales in India were 7% higher than in the same period in the last year. It is also 21% higher than Q1FY23. However, due to seasonal factors and also ongoing tension in Europe, the sales tanked there on a QoQ basis. 

Outlook: Tata Steel anticipates the demand to grow in India further and the cost of raw materials to come down. However, in European regions, the demand may be sluggish due to recession fears and also increasing energy costs can dampen production and profits.