Tata Steel (TATASTEEL) Q4 05/06 earnings summary

Executive summary

• Consolidated gross turnover crossed Rs. 22,000 crores; PAT reached Rs. 3,734.62 crores, while EPS rose to Rs. 67.62 in FY06.

• Record standalone hot-metal, crude-steel and saleable-steel production reached 5.177 mt, 4.730 mt and 4.520 mt, respectively.

• Growth strategy combines Indian capacity expansion with overseas acquisitions, value-added products and access to raw materials.

Financial highlights

• Consolidated gross turnover was Rs. 22,518.75 crores vs Rs. 17,596.96 crores; PAT was Rs. 3,734.62 crores vs Rs. 3,603.26 crores.

• Consolidated net sales after excise were Rs. 20,244.43 crores vs Rs. 15,998.61 crores; profit before tax was Rs. 5,514.98 crores vs Rs. 5,442.44 crores.

• Standalone net sales were Rs. 15,139.39 crores vs Rs. 14,498.95 crores; operating profit was Rs. 5,931.51 crores vs Rs. 6,045.36 crores.

• Standalone PAT was Rs. 3,506.38 crores vs Rs. 3,474.16 crores; EPS was Rs. 63.35 vs Rs. 62.77. Consolidated EPS was Rs. 67.62 vs Rs. 65.27.

• Standalone product sales rose 8% to Rs. 16,521.44 crores; domestic steel sales rose 17%, while steel export sales fell 14%.

Outlook and guidance

• Target: raise steel capacity to about 30 mtpa by 2015, using Jamshedpur expansion and greenfield projects in Orissa, Chhattisgarh, Jharkhand and Bangladesh.

• Three proposed Indian greenfield plants total 23 mtpa; execution is subject to raw-material linkages and approvals. Bangladesh plans include a 2.4 mtpa steel plant.

• Jamshedpur's 1.8 mtpa crude-steel expansion was expected to finish by 2008; Haldia coke and power capacity expansion was expected to start production in 2007.

• Steel demand outlook remained positive; industry forecasts cited 7.3% global demand growth in 2006 and 5.8% in 2007, with raw-material and energy costs a continuing challenge.