India-headquartered steel giant Tata Steel Group has recorded a net profit of INR 7.02 billion ($99.1 million) in the first quarter ended June 30 of the financial year 2019-2020, compared to a net profit of INR 19.3 billion in the corresponding period of the previous financial year, driven by a global decline in steel prices, weakening economic activities and uncertainty around the US-China trade wars, coupled with a sharp rise in iron ore prices due to supply disruptions.
The group's June quarter turnover amounted to INR 359.47 billion ($5.07 billion), increasing by 1.27 percent year on year. The group’s EBITDA totaled INR 55.3 billion ($780.5 million) in the given quarter, falling by 21.7 percent year on year.
In the June quarter of the financial year 2019-20, Tata Steel Group’s consolidated steel deliveries amounted to 6.34 million mt, up 5.3 percent, while the company’s total production amounted to 7.15 million mt, rising by 10.8 percent, both year on year.
“The steel sector is facing significant headwinds which have affected spreads and overall profitability. However, our strong business model in India has helped us counter the overall market weakness, including the slowdown in the automotive sector, by growing volumes in multiple customer segments. While Tata Steel Europe’s performance has been affected by market and operational issues, we are implementing a transformation plan which aims to reduce operating costs, rationalize capital expenditure and working capital and improve overall cashflows”, TV Narendran, CEO & MD of Tata Steel, said.
Meanwhile, Tata Steel has signed a memorandum of understanding to divest 70 percent of its shareholding in Tata Steel Thailand to private equity fund Synergy Metals and Mining Fund (Synergy), following the termination of its plans to sell stakes in its Southeast Asian business to Chinese HBIS Group which SteelOrbis has reported.