Will Europe operations dent Tata Steel's Q4 profit?

Tata Steel is likely to report over 19 percent year-on-year decline in March quarter profit to Rs 350 crore due to poor show from its European subsidiary. The firm which will announce Q4 numbers on Thursday is expected to announce around 2 percent rise in sales to Rs 34500 crore, according to CNBC-TV18 poll.

How will Tata Steel perform in domestic market
 
*Net sales are seen up 13.3 percent YoY to Rs 10620 crore
*EBITDA margins will slide to 29.1 percent versus 30.8 percent              
*Profit is expected to decline around 6.4 percent YoY to Rs 1460 crore
*Realisation is expected to decline 8 percent YoY
*Higher sales in a weak domestic demand environment is encouraging.
*Capacity utilization is rising at Jamshedpur owing to the ramp up from the newly commissioned 2.9 million tonne expansion
*Expect EBIDTA/t to increase to USD 270/t led by marginally higher prices, lower coking coal cost and better
* Price hikes were difficult to be passed on to the consumers due to faltered steel demand and pressure to increase sales volume
*Margins will be aided by commissioning of new coke plant in December 2012 and would reduced external coke purchases during Q4
*Indian operations would enjoy lower coking coal price benefit in the quarter under preview International operations
*Weakness in European market will continue to impact Tata Steel’s international performance
*Tata Steel Europe (TSE) and other subsidiaries to may report positive EBITDA due to quarter-on-quarter increase in price
*Price in most geographies, including Europe, were at 2-3 year low levels in 3QFY13 but have improved in 4QFY13
*Steel price hikes have been announced in Europe beginning Jan 2013
*Coking coal prices have been in the declining trend over the last one year ((Full impact of the decline in coking coal prices))
*Some operating leverage due to higher volume QoQ and cost savings due to Port Talbot blast furnace restart
*Expect steel deliveries at 3.2 million tonne (-10 percent YoY) but grow 10 percent QoQ due to sequentially better demand in 4Q led by restocking
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