Tuesday, February 10, 2015

News: High value products help Tata Steel

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Sales of high-value, differentiated products, like those manufactured in South Yorkshire, now make up more than a third of overall sales for Tata Steel's European operations.

Reporting its financial results for the first nine months of its financial year, and the quarter which ended on December 30 2014, the Indian-owned group saw the turnover for its European operations come in at £6.14 billion for the nine month period, 0.1% on the same period last year, and £1.97 billion for the third quarter, 6.3% down on the same quarter in 2014.

Profitability (EBIT / earnings before taxes) was reported at £74.7m for the nine month period and £49.3m for the quarter - both up on losses reported in the corresponding periods in the previous financial year. Quarterly figures continue to improve, EBIT for the second quarter of 2015 was £11.3m.

Tata Steel in Europe is pursuing an objective of supporting customer success in their own markets through product and service improvement. This means introducing new products and in Rotherham and Stocksbridge, which make up an important production base for aerospace steels, sites have been benefiting from significant investment and a focus on a high-quality portfolio programme.

The company launched 22 new products in the first nine months of its 2015 financial year, and has now achieved a milestone of 100 new products in its portfolio. Profitability was also helped by lower input costs.

Karl Koehler, chief executive of European operations at Tata Steel, said: "The improvement in our financial performance has been gathering strength. A significant contributor to this has been the transformation of our product mix towards advanced steel products that give our customers a competitive edge.

"We have just passed a significant milestone in this journey after launching the 100th new product in our portfolio which has been achieved through a new product development process.

"European steel demand continued to recover in 2014 and should improve modestly again this year. But margins remain under pressure, with imports having risen from countries like China and Russia.

"We see opportunities to further improve our performance this quarter, and we will continue to enhance our portfolio to strengthen our position in Europe."

According to the latest annual data from UK Steel, a division of EEF, the manufacturers' organisation, output of steel in the UK in 2014 was virtually unchanged at 11.9 million tonnes, which was just 0.2% higher than 2013. It believes that stagnating Eurozone economies and the sharp slowdown in Chinese growth has lead to a growth in steel imports being dumped both here and in other EU countries.

UK Steel has called on the European Commission to act on unfairly-traded steel imports and for the British government to support such action.

Tata's Indian business faced strong market headwinds in terms of weak steel demand and a surge in low priced imports, which meant that the whole group saw profit after tax sink to £16m for the third quarter, down 87% on Q2.

Tata Steel website

Images: Tata Steel

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