Tata Steel (TATASTEEL) Q4 08/09 earnings summary

Executive summary

• FY09 consolidated turnover rose 12% YoY to ₹147,329 crore; EBITDA increased 1% to ₹18,495 crore as severe H2 demand contraction offset a strong first half.

• Profit after tax, minority interest and associates fell to ₹4,951 crore from ₹12,350 crore, reflecting a ₹4,095 crore exceptional restructuring, impairment and disposal loss and lower European earnings.

• Indian operations delivered record performance, while Europe cut production sharply to align with demand; cost reduction, liquidity preservation and balance-sheet de-leveraging became priorities.

Financial highlights

• Group steel deliveries were 28.54 million tonnes, down 10% YoY; turnover reached ₹147,329 crore, up 12%, and EBITDA was ₹18,495 crore, up 1%.

• PBT before exceptional items rose to ₹10,838 crore from ₹10,036 crore; the ₹4,095 crore exceptional loss related to European restructuring, impairment and disposals.

• Group operating cash flow was ₹15,630 crore versus ₹13,394 crore; net debt increased to ₹50,354 crore from ₹48,259 crore at year-end.

• India operations reported deliveries up 9%, turnover up 23%, EBITDA up 14% and net profit up 11% YoY, despite H2 price declines.

Outlook and guidance

• The next 12–18 months were expected to remain difficult; steel demand was expected to stabilise in late 2009, with a mild recovery in 2010.

• India’s recovery was viewed as comparatively robust, supported by infrastructure and rural-development spending; European and Western recovery was expected later.

• The 3 mtpa Jamshedpur expansion was targeted for commissioning by 2011; group capacity ambition remained above 50 million tonnes by 2015.

• Priorities included European restructuring, higher Indian production, working-capital discipline and advancing overseas raw-material projects.