Thursday, August 14, 2014

News: Tata's new products continue to boost sales

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Tata Steel, the Indian-owned steelmaker that has significant operations in Rotherham, has reported that its new products are continuing to gain importance to its overall sales.

For its financial results for the quarter ending June 30 2014, Tata's European operations saw turnover reach £2 billion, an increase of around 12% on the same quarter last year. Production and deliveries were similar to the year before but, despite a reduction in the market spread, profitability (EBIT / earnings before taxes) was £13.2m, up from £1.3m.

Tata said that European steelmakers have been contending this year with rising imports, which are limiting its ability to take advantage of growing European demand.

The European operations pursued an objective of supporting customer success in their own markets through product and service improvement. Ten new products have been launched so far this year, such as a new automotive steel grade which combines strength and formability, making it ideal for the crash-protection structure of vehicles. Similarly in South Yorkshire, which is an important production base for aerospace steels, sites have been benefiting from significant investment and a focus on a high-quality portfolio programme.

These efforts have resulted in the proportion of differentiated products in the operations' sales rising by around a fifth compared to last year.

The company also started processing centres in the Netherlands and Germany during the quarter to support customers by supplying them with lighter, stronger steels. Both facilities will be supporting customers in Germany – a strategic market for Tata Steel.

The focus on costs was also maintained, leading to year-on-year savings of £30m in the first quarter of the financial year.

Dr Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: "European steel demand is moving in the right direction. Though demand remains well below levels we would regard as healthy, we can see greater stability emerging in the markets we serve.

"Our quarterly financial performance improved slightly, despite market spreads tightening compared to the previous year. This would not have happened without the work we are doing to reduce costs and improve our products and services.

"We maintained the good pace set last year in our portfolio enhancement programme. We have launched ten new products and increased the proportion of differentiated sales by almost 20%.

"Our operational performance matched that of a year ago, when we restored output to more normal levels. But Europe's position as the world's most open market is bringing in a rising tide of imports. While we fully support free trade, all trade must be fair and international rules fully respected and enforced.

"Our focus on operational reliability and costs will continue as we pursue further progress towards sustainable financial performance."

Turnover of the Tata Steel Group rose 11% to £3.54 billion with earnings at £423m, up from £367m in the same quarter last year.

Tata Steel website

Images: Tata Steel

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