May 16, 2017 11:32 pm JST

Tata Steel posts quarterly loss after pension settlement charges

MUMBAI (NewsRise) -- Tata Steel reported a surprise loss in the fourth after taking a one-time hit on account of a settlement payout to its British pension scheme.

The consolidated net loss in the fourth quarter ended March 31 stood at 11.68 billion rupees ($182 million), compared with a loss of 30.42 billion rupees a year earlier, the company said in a statement on Tuesday. Analysts were expecting a net income of 10 billion rupees.

Sales grew 30% to 353.05 billion rupees, driven by volume growth and supportive pricing environment.

The latest quarter had exceptional items amounting to 40.69 billion rupees. Excluding these items, Tata Steel posted a net income of 33.52 billion rupees.

The company said it will pay British Steel Pension Scheme a settlement amount of 550 million pounds ($710 million) as well as a 33% equity stake in Tata Steel U.K. The pact is expected to pave the way for the sale of Tata Steel's European operations, including the remaining British business, to Germany's ThyssenKrupp.

Tata Steel has been grappling with losses at its U.K. operations amid a flood of cheap imports from China. In March 2016, the company said it is exploring options for the unit which has been closing plants and laying off workers.

The company has been in talks with ThyssenKrupp for a potential sale of the European operations, though the deal has been reportedly stalled by differences between the two over managing the pension liabilities of the U.K. assets.

In its statement on Tuesday, Tata Steel said the company has completed the consultation process and closure of the defined benefit scheme in the U.K. "Following the above, we... are hopeful of reaching a final agreement shortly."

In February, Tata Steel agreed to sell its speciality steel business to Liberty House Group for $126 million.

Tata Steel said sales volumes in domestic market grew 18% mainly because of a ramp up in production at its Kalinganagar plant. The Kalinganagar plant crossed 3.7 million tons since commissioning in May 2016.

Indian steel companies such as Tata Steel are limping back to profitability after incurring losses for nearly two years due to a sharp drop in international prices amid a supply glut from China and muted demand in the domestic market. Last year, India imposed several curbs on the import of cheap supplies to help domestic steel makers.

"The ongoing transformation programme in the U.K., performance improvements in India and Netherlands contributed to the strong underlying performance," said Group Executive Director Koushik Chatterjee. "The market support and favourable currencies also helped the business to achieve this significantly improved performance."

Shares of Tata Steel ended 0.27% higher in Mumbai trading, while the benchmark S&P BSE Sensex closed 0.86% up.

--Dhanya Ann Thoppil

Asia300

Tata Steel Ltd.

India

Market(Ticker): BOM(500470)
Sector:
Industry:
Non-Energy Minerals
Steel
Market cap(USD): 7,293.88M
Shares: 971.21M

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