Tata Steel Ltd, Europe's second-largest steel producer, said on Thursday market conditions in Britain had "significantly worsened" during its second quarter due to a slump in prices and more cheap Chinese imports.
Tata Steel, which has cut thousands of jobs since it bought Anglo-Dutch producer Corus in 2007, has been working on turning around its struggling operations in Britain.
The crisis in Britain's steel sector escalated further last week as Tata Steel blamed its decision to cut British jobs on a flood of cheap imports, particularly from China.
Tata said on Thursday the "rapid and sharp deterioration" in the British business environment had forced it to take a non-cash impairment charge which, together with restructuring charges and other provisions, totalled Rs 87 billion (USD 1.3 billion).
"Our operating result has turned negative this year, reflecting the huge challenges the global steel industry is facing. In the UK these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness," Karl-Ulrich Köhler, CEO of Tata Steel in Europe, said in a statement.
Tata, which also operates in India and South East Asia, reported a surprise 22 percent rise in its quarterly consolidated net profit, as one-time gains helped offset cheaper imports from the world's top steel producer China.
Net profit at Tata Steel, a unit of a hotels-to-automobiles conglomerate, rose to Rs 15.29 billion (USD 232.9 million) on a consolidated basis in the quarter ended September 30, compared to Rs 12.54 billion in the year ago period.
Analysts had forecast a net profit of Rs 11.8 billion, data compiled by Thomson Reuters shows.
The profit was helped by Rs 28 billion earned from the sale of quoted investments during the quarter, Tata said in a regulatory statement.
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