OREANDA-NEWS. November 11, 2011. Performance Highlights:

Turnover at Tata Steel in India of  16,072 crores (USD 3.28 billion) in H1 FY'12 was up 17.7% from the Ш,658 crores (USD 2.79 billion) in H1 FY'11. Q2 sales of  8,212 crores (USD 1.68 billion) were up 15.5% from the  7,107 crores (USD 1.45 billion) of Q2 FY'11 and up 4.5% from the  7,860 crores (USD 1.61 billion) of Q1 FY'12.

Tata Steel posted EBITDA in India of  6,449 crores (USD 1.32 billion) in H1 FY'12, up 1.9% from  6,327 crores (USD 1.29 billion) in H1 FY'11. Q2 EBITDA of  2,793 crores (USD 570 million) was down 16.9% from the  3,362 crores (USD 686 million) of Q2 FY'11 and down 23.6% from the  3,656 crores (USD 747 million) of Q1 FY'12.

Turnover at Tata Steel's European operations of  41,695 crores (USD 8.51 billion) in H1FY12 was 19.7% up from the  34,834 crores (USD 7.11 billion) in H1FY11. Q2 sales of  21,160 crores (USD 4.32 billion) were 19.0% up from the  17,787 crores (USD 3.63 billion) of Q2 FY'11 and 3.0% up from the  20,535 crores (USD 4.19 billion) of Q1 FY'12.

Tata Steel in Europe posted EBITDA of  2,412 crores (USD 493 million) in H1FY12, 8.0% up from  2,234 crores (USD 456 million) in H1FY11. Q2 EBITDA of  505 crores (USD 103 million) was 42.8% down from the Ш3 crores (USD 180 million) of Q2 FY'11 and 73.5% down from the  1,907 crores (USD 389 million) of Q1 FY'12, which included the Teeside Cast Products settlement credit of  685 crores (USD 140 million).

Tata Steel Group's Profit after tax (after minority interest and share of profit of associates) during the first half of the financial year 2011-12 (H1 FY'12) was  5,559 crores (USD 1,135 million) compared to a profit of  3,804 crores (USD 777 million) in the first half of the financial year 2010-11 (H1 FY'11), an increase of  1,755 crores (USD 358 million). Tata Steel Group's Profit after tax for Q2 FY'12 at  212 crores (USD 43 million) fell from the profit of  1,979 crores (USD 404 million) in the corresponding period of the previous year (Q2 FY'11).

Group EBITDA in H1 FY'12 was Ш,302 crores (USD 2.31 billion) compared to  9,024 crores (USD 1.84 billion) in H1 FY'11. Group EBITDA in Q2 FY'12 at  2,944 crores (USD 601 million) was 34.5% lower than the  4,497 crores (USD 918 million) recorded in Q2 FY'11. The Group EBITDA in Q2 FY'12 declined on account of higher global raw materials costs and lower average selling prices at Tata Steel Europe.

Group consolidated turnover in H1 FY'12 of  65,798 crores (USD 13.44 billion) was 17.8% up from the 55,840 crores (USD 11.40 billion) in H1 FY'11. The consolidated turnover at 32,798 crores (USD 6.7 billion) in Q2 FY'12 was 14.5% up from the 28,646 crores (USD 5.85 billion) in Q2 FY'11.

The Group's steel deliveries in H1 FY'12 rose by 1.8% to 12.17 million tonnes compared to 11.96 million tonnes in H1 FY'11. Steel deliveries increased by 0.8% to 6.11 million tonnes in Q2 FY'12 from the 6.06 million tonnes recorded in Q2 FY'11. Deliveries from Tata Steel India and NatSteel Holdings grew, whereas Tata Steel Thailand's operations were affected by adverse weather conditions.

Net debt at the end of September 2011 was 45,056 crores (USD 9.2 billion) compared to 46,627 crores (USD 9.5 billion) at the end of March 2011.

Financial Performance Analysis:

Consolidated Financial results summary (under Indian GAAP) for the six months ended

September 2011

All figures in USD  million, unless specified

H1 FY'12

H1 FY11

HIGHLIGHTS

Q2 FY'12

Q2 FY'11

Q1 FY'12

12.17

11.96

Steel Deliveries (Mn tons)

6.11

6.06

6.06

13,436

11,403

Turnover

6,698

5,850

6,739

2,308

1,843

EBITDA

601

918

1,707

17.2

16.2

EBITDA Margin (%)

9.0

15.7

25.3

461

433

Depreciation

226

220

235

297

258

Net Finance Charges

146

136

151

1,524

1,124

Profit before Taxes (after

214

554

1,310

 

 

Exceptional Items)

 

 

 

11.3

9.9

PBT Margin (%)

3.2

9.5

19.4

1,135

777

Profit after Taxes, Minority

43

404

1,092

 

 

Interest and Share of

 

 

 

 

 

Associates

 

 

 

8.4

6.8

PAT Margin (%)

0.6

6.9

16.2

For the purposes of converting all financial numbers to USD  for all comparable periods, a USD /  exchange rate of 48.97 has been used throughout this document.

Executive Comment

Tata Steel Managing Director Mr HM Nerurkar said: "Tata Steel's Indian operations performed strongly despite the overall soft market situation. The continued interest rate hikes impacted steel demand growth, but the Company sequentially increased sales volumes due to enhanced market reach and customer focus. Higher raw material prices and adverse currency movements impacted profits in Q2 FY'12, but the focus on company-wide cost saving initiatives yielded desired results. We remain committed to commission the 2.9mtpa expansion in Jamshedpur in the last quarter of this fiscal year and we are making good progress on the greenfield project in Odisha. Efforts to reinvigorate the South East Asian operations are continuing through new product launches, branding initiatives, increased market access and improvements in operating parameters."

Tata Steel Europe MD & CEO Dr Karl-Ulrich Kohler said: "Higher raw material costs and lower average selling prices made the normally quiet summer quarter particularly testing. Despite these headwinds, Tata Steel in Europe succeeded in matching the delivery volumes achieved in Q1. The actions taken after 2008 to weather the financial crisis has strengthened the European operations' ability to cope with market disturbances. The restructuring and performance improvement initiatives that we launched in the first half will build on that progress and yield further competitive edge. Our focus on product and service innovation is also achieving breakthroughs in pursuit of our mission to be the long-term preferred partner of customers in our chosen markets."