Tata Steel (TATASTEEL) Q4 10/11 earnings summary

Executive summary

• FY11 consolidated results reversed FY10’s loss: PAT ₹8,983 crore vs loss ₹2,009 crore; turnover rose 16% to ₹1,18,753 crore.

• EBITDA increased 83% to ₹17,103 crore; excluding specified asset-sale and other exceptional items in both years, EBITDA was ₹16,859 crore vs ₹8,447 crore.

• Higher steel prices and strong Indian operations supported the recovery, while rising raw-material costs, European market weakness and Thailand operating challenges remained drags.

Financial highlights

• Consolidated turnover ₹1,18,753 crore, up 16%; EBITDA ₹17,103 crore vs ₹9,340 crore; PAT ₹8,983 crore vs FY10 loss ₹2,009 crore.

• Standalone net sales ₹29,396 crore, up 17%; PAT ₹6,866 crore, up 36%; EBITDA ₹12,224 crore, up 25%.

• Consolidated exceptional items included a ₹2,503 crore profit on disposal of Teesside Cast Products.

• Net cash from consolidated operating activities was ₹6,463 crore vs ₹10,502 crore; working capital increased ₹7,175 crore, mainly reflecting Europe and higher inventory prices.

Outlook and guidance

• Jamshedpur’s 2.9 mtpa brownfield expansion was scheduled for FY12, raising crude-steel capacity from 6.8 mtpa to 9.7 mtpa; first 3 mtpa Kalinganagar phase targeted January 2014.

• World steel demand was forecast to grow 6% in both 2011 and 2012; India demand was forecast to rise 13.3% in 2011 and 14.3% in 2012.

• NatSteel targeted 0.5 mt of value-added downstream products in FY12; wire exports were planned to rise 50% over FY11.

• High inflation, tighter monetary policy and infrastructure-project delays could slow Indian growth; European construction recovery was expected to remain modest.