Tata Steel (TATASTEEL) Q4 04/05 earnings summary

Executive summary

• FY 2004-05 delivered record turnover of Rs. 16,053.48 crore and PAT of Rs. 3,474.16 crore, up 99% YoY, on firmer steel realisations, richer product mix and cost improvements.

• Strategy centered on scaling capacity, securing raw materials and building a regional footprint, including the NatSteel Asia acquisition and planned Jamshedpur and Kalinganagar expansions.

Financial highlights

• Net sales/income from operations rose 35% to Rs. 14,498.95 crore; total sales of products and services reached Rs. 15,876.87 crore, up 33%.

• Operating profit increased to Rs. 6,045.36 crore from Rs. 3,495.41 crore; PBT before exceptional items and tax was Rs. 5,387.81 crore, versus Rs. 2,888.64 crore.

• PAT was Rs. 3,474.16 crore versus Rs. 1,746.22 crore; EPS rose to Rs. 62.77 from Rs. 31.55, with prior-year EPS adjusted for bonus shares.

• Consolidated revenue was Rs. 15,998.61 crore; consolidated profit after minority interest and associate profit was Rs. 3,603.26 crore, versus Rs. 1,788.78 crore; EPS was Rs. 65.27.

• Steel sales volumes were lower: Steel Division sales fell 1.3% to 3.70 million tonnes; export volume fell 22% to 0.51 million tonnes, while total export turnover rose 46% to Rs. 2,183.79 crore.

Outlook and guidance

• Capacity ambition: increase steel production capacity from 4 MTPA to 15 MTPA over five years; management targeted 15 MTPA by 2010.

• India steel demand was expected to grow ~8% in 2005-06; domestic steel consumption was projected to exceed 50 million tonnes by 2010, with annual additions of 3-4 million tonnes for several years.

• The 1 MTPA Jamshedpur expansion was expected to lift capacity to 5 MTPA, with facilities due to start operations in 2005-06; the next Jamshedpur expansion phase was being planned.

• Management expected sustained near-term steel demand, while noting that demand could stabilize at current levels and that Asia would increasingly shape industry growth.