Tata Steel India second quarter net down 49.5 percent

28 Oct, 2009

Tata Steel Ltd, the world's No 8 steel maker by output, on Tuesday said quarterly profit fell by half, missing forecast, on falling prices, sending its shares down. The company, which acquired Europe's second-largest steelmaker Corus in 2007, said standalone net profit fell to 9.03 billion rupees ($192 million) for the fiscal second quarter, from 17.88 billion reported a year earlier.
Net sales fell to 56.3 billion rupees from 67.3 billion. Shares in Tata Steel, valued at about $10.1 billion, which ended 7.3 percent down at 501.30 rupees had fallen as low as 495.10 rupees after the earnings. Tata Steel said sales volume grew by a fifth to 1.46 million tonnes in the quarter and raw material consumption rose 6.1 percent to 14.27 billion rupees.
Finance charges rose 54 percent to 3.92 billion rupees for the firm, which raised $500 million through global depository receipts in July. A Reuters poll of 11 analysts had estimated a standalone net profit of 10.2 billion rupees on net sales of 60.67 billion rupees.
Tata Steel bought European steel maker Corus in 2007. The Indian operations account for about a quarter of the group's annual global capacity of 30 million tonnes. Global steel production has tumbled this year, as demand from key industries such as construction and automotive shrank.
But as macroeconomic data improves and inventories deplete, demand is gradually coming back, encouraging steelmakers to restart some idled capacity. Earlier this month, the World Steel Association forecast steel demand would fall 8.6 percent this year, a much smaller fall than the 15 percent it predicted in April.
World No 4 steelmaker POSCO has reported an improvement in quarterly net profit on a sequential basis while Japan's JFE Holdings, the world's No 6 steelmaker, returned to quarterly profit after a loss in the previous quarter. The shares rose 30.6 percent in the September quarter, outperforming the benchmark index that improved 18.2 percent.

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