Tata Steel Q3 results update
Last updated: 10 Feb, 2021 | 06:41 am
Back to profit: Tata Steel has reported a robust rise in net profit in Oct-Dec 20 period, driven by higher prices, and favourable product mix. The company has reported a net profit of Rs 3,989 crore, beating analyst estimates. Analysts had earlier estimated a profit of about Rs 3,410 crore. The company had reported a loss of about Rs 1,166 crore in the same period last year.
Revenue rises: Revenue rose to a seven-quarter high of Rs 39,594 crore, up 11.5% on-year. Analysts had expected the profit of about Rs 38,982.40 crore. The recovery in the global and Indian economy has led to a sharp improvement in steel demand, benefiting the company.
India business doing well: The company's India operations witnessed highest ever quarterly EBITDA of Rs 8,811 crore, more than doubling from the same quarter in the corresponding year. On the other hand, Tata Steel Europe posted a loss of Rs 724.27 crore at EBITDA level in Q3FY21 against Rs 956.30 crore in Q3FY20.
Update on Netherlands Unit: Following the termination of the discussions with SSAB on Tata Steel Netherlands, the company will focus on performance and cash flows in the immediate term. Earlier, the company had said that it is in talks with Swedish steelmaker SSAB AB to sell its Netherlands unit. According to estimates by Credit Suisse, the Ijmuiden Unit in Netherlands could fetch between $2-2.5 billion (around \u20b918,600 crore). The company has an external debt of about $2 billion. Had the talks gone through, the deal would have been a major positive for the company, and help in deleveraging.
Strong progress in de-leveraging: The company's focus on debt management continues to be on target. The company has reduced its net debt by Rs.18,609 crore and gross debt by Rs.7,649 crore in the fist nine months of FY21. This has significantly improved the credit metrics of the company. The company has guided for a Rs 12,000 crore reduction in gross debt in the fourth quarter of the current financial year.
The company has reported a good set of numbers in Q3FY21, aided by recovery in domestic steel demand, as the economy continues to improve. All the operating hubs in India have performed exceptionally well with the standalone EBITDA margin at 37.5%. Key subsidiaries Tata Steel BSL and Tata Steel Long Products have also reported the highest ever profitability in recent years. However, the European operations continued to weigh. The company has reiterated that it is looking to find a strategic and sustainable solution for Tata Steel Europe, though in the immediate term, it will focus upon business performance and cash flows. The shares were trading 2% higher at Rs 710 on BSE.