Tata Steel (TATASTEEL) Q4 09/10 earnings summary

Executive summary

• A difficult first half gave way to a strong H2 recovery; restructuring, cost savings and higher deliveries lifted H2 consolidated EBITDA to Rs 8,734 crore from Rs 606 crore in H1.

• FY10 consolidated revenue fell 30.5% and EBITDA declined 49.5% YoY; the year ended with a Rs 2,009 crore loss after tax, versus Rs 4,951 crore profit in FY09.

• Indian operations remained profitable and delivered record production, while European operations returned to EBITDA-positive quarters after restructuring and capacity restarts.

Financial highlights

• Consolidated turnover was Rs 102,393 crore, down 30.5% YoY; H2 turnover of Rs 53,706 crore rose 10.3% versus H1 on higher deliveries and prices.

• Consolidated EBITDA was Rs 9,340 crore versus Rs 18,495 crore in FY09; EBITDA margin was 9% versus 13%.

• Consolidated loss after tax, minority interest and associates was Rs 2,009 crore versus FY09 profit of Rs 4,951 crore; H2 PAT was Rs 2,907 crore after H1 loss of Rs 4,916 crore.

• Standalone PAT was Rs 5,047 crore versus Rs 5,202 crore; basic EPS was Rs 60.26 versus Rs 69.45, and diluted EPS was Rs 57.31 versus Rs 62.94.

• Recommended ordinary dividend was Rs 8/share versus Rs 16/share in FY09; standalone dividend payout was 17% versus 29%.

Outlook and guidance

• World steel consumption was forecast to grow 10% to 1.23 billion tonnes in 2010; Indian carbon-steel consumption was expected to rise over 10% in FY11.

• Indian FY11 flat-products and long-products consumption was forecast to grow 10.7% and 10.3%, respectively; rising raw-material costs, rates and inflation temper the outlook.

• EU steel demand recovery was expected to remain gradual, with production at 75–80% of 2007–08 levels; fragile underlying demand and sovereign-debt risks remained concerns.

• Jamshedpur expansion was targeted to lift crude-steel capacity from 6.8 mtpa to 9.7 mtpa by FY12; completion was expected in Q3 FY12.

• Long-term ambition was global annual output of 40–50 million tonnes, supported by manufacturing in India, Asia, the UK and Continental Europe and integrated mining operations.