Tata Steel (TATASTEEL) Q4 06/07 earnings summary

Executive summary

• FY 2006-07 delivered record turnover and profit, higher steel output and sales, and a proposed 155% total dividend, including a 25% special dividend.

• The Corus acquisition closed on 2 April 2007, expanding global scale; Corus results were excluded from FY 2006-07 consolidated results because control began after year-end.

Financial highlights

• Consolidated turnover, excluding Corus, rose 23% to Rs. 27,437 crore; EBITDA increased 20% to Rs. 7,888 crore and PAT rose 12% to Rs. 4,177 crore.

• Standalone net sales/income from operations increased 15% to Rs. 17,552 crore; operating profit rose 17% to Rs. 6,973 crore, PBT 20% to Rs. 6,262 crore and PAT 20% to Rs. 4,222 crore.

• Finished steel sales rose 11.3% to 4.51 mt; average price realisation improved, mainly from higher hot-rolled coil and sheet prices, while export turnover fell ~5% on lower volumes.

• Consolidated EPS was Rs. 73.06 versus Rs. 67.62; standalone EPS was Rs. 73.76 versus Rs. 63.35.

Outlook and guidance

• Jamshedpur expansion to 6.8 mtpa crude steel was expected by June 2008; a further 2.9 mtpa expansion to 9.7 mtpa was targeted for 2010.

• The 6 mtpa Kalinganagar project was planned in two 3 mtpa phases, with phase one targeted for 2010; completion depended on land acquisition, rehabilitation and approvals.

• Long-term ambition: 50 mtpa capacity by 2015, using domestic expansions, greenfield projects, overseas growth and strategic raw-material access.

• IISI forecast global steel consumption growth of 5.9% in 2007 and 6.1% in 2008; Indian steel demand was expected to grow 10% in FY 2007-08.