© Reuters.
Tata Steel Ltd, under CEO and MD T V Narendran and CFO Koushik Chatterjee, posted a consolidated loss of Rs 6,511 crore ($871 million) in Q2FY24, primarily due to restructuring charges in its UK operations and decreased sales. This represents a 7% decline in revenue compared to the same period last year.
Despite these challenges, the company’s Indian operations remained stable with crude steel production of approximately 5 million tons. Its domestic deliveries saw a 6% year-on-year rise, particularly in the Auto and Branded Products & Retail segment.
In line with its expansion plans, Tata Steel has commenced production of FHCR coils at the Kalinganagar CRM complex. It is also planning a 5 MTPA expansion at the same location. Additionally, the company intends to invest in a scrap-based Electric Arc Furnace (EAF) in the UK, aiming to reduce carbon emissions by 50 million tons over the next decade.
The restructuring of its UK operations resulted in a charge of Rs 6,348 crore ($846 million). As part of this restructuring, Tata Steel agreed to a £1.25 billion ($1.67 billion) deal with the British government for decarbonisation of the Port Talbot site. This move might impact around 3,000 jobs. In response, trade union Unite has called for government intervention to prevent potential job losses.
Additional charges related to the UK business amounted to Rs 6,358 crore ($848 million). Despite these financial setbacks, Tata Steel reported an EBITDA margin of 8% and net debt of Rs 77,032 crore ($10.28 billion). The company maintains a group liquidity position at Rs 27,637 crore ($3.69 billion) and confirmed its annual guidance for FY24 at Rs 16,000 crore ($2.13 billion).
InvestingPro Insights
Tata Steel Ltd, as noted by InvestingPro, has shown impressive gross profit margins and has been a prominent player in the Metals & Mining industry. These factors may have contributed to the company’s ability to maintain dividend payments for 23 consecutive years, a testament to its financial resilience.
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