Tata Steel August 7 reported a steep 64.3 percent year-on-year (YoY) decline in June quarter profit to Rs 693 crore amid muted revenue growth and subdued operating income.
The profit in the corresponding quarter last year was Rs 1,940.8 crore. Lower other income (down 29 percent YoY) also impacted bottom line.
Revenue during the quarter grew 1.27 percent YoY to Rs 35,947.1 crore, dented by lower domestic and Europe growth. It was supported by Tata Steel BSL (erstwhile Bhushan Steel acquired under NCLT) which grew 105.5 percent YoY to Rs 4,332.73 crore in Q1.
Tata Steel India business declined nearly 2 percent to Rs 16,091 crore and Tata Steel Europe revenue fell 11.77 percent to Rs 14,495 crore compared to a year ago.
Steel prices in India declined as subdued economic activity, seasonal slowdown and liquidity issues weighed on domestic consumption. Higher net imports further exacerbated the demand-supply balance, the company said.
"In Europe, the steel industry faces significant headwinds in terms of lower economic growth, uncertainty around Brexit and the trade conflict. This coupled with a rising share of imports and elevated raw material prices led to a sharp decline in steel spreads," it added.
However, the company has delivered 11 percent YoY volume growth for production and 5 percent YoY for deliveries.
At the operating level, earnings before interest, tax, depreciation and amortisation dropped 15.4 percent YoY to Rs 5,376.9 crore and margin contracted 294bps to 14.96 percent in the quarter ended June 2019, partly dented by higher finance and depreciation costs in Q1.
Numbers were lower than analyst expectations. Profit was estimated at Rs 1,350 crore on the revenue at Rs 37,050 crore and EBITDA was estimated at Rs 5,615 crore with margin at 15.2 percent for the quarter, according to a poll of analysts conducted by CNBC-TV18.
After the termination of the definitive agreement with HBIS Group to divest 70 percent stake in South-East Asia business, Tata Steel, on August 7, executed a Memorandum of Understanding to divest 70 percent of its shareholding in Tata Steel Thailand to Synergy Metals and Mining Fund, company, said in its BSE filing.
The stock closed at Rs 381.80, down Rs 19.05, or 4.75 percent ahead of earnings.