Tuesday, August 14, 2012

News: Tata Steel Europe "under enormous stress"


Tata Steel Europe has continued to be affected by the low demand across the eurozone and from higher raw material costs.

In their latest financial results, the group reported that EBITDA (earnings before tax) was $111m for the first quarter of 2012, up from the $26m in the previous quarter but down on the same period last year ($343m).

The Indian-owned firm operates specialist steel producing sites in Rotherham. The steel, predominantly stainless and low alloy grades, is used in landing gear and aircraft engines.

In the three months to June 30 2012, turnover at Tata Steel Europe was down slightly as deliveries declined by 9.5% to 3.21 million tonnes and sales declined by 15% compared to the same period last year.

Dr Karl-Ulrich Köhler, MD & CEO at Tata Steel Europe, said: "Our financial performance continued to improve as raw material cost pressure eased further and strategic cost initiatives yielded further benefits.

"European steel demand is lower than expected and prices have weakened. We continue to seek to mitigate the effects of this with tight cost control and emphasis on increased product differentiation."

The performance in Europe reduced the profits of the whole group which reported a solid performance at home in India.

In Tata Steel's 105th Annual Report, published earlier this year, Ratan Tata, chairman of the Tata Group said: "While Tata Steel's operations in India are expected to remain strong, its operations in Europe will continue to be under enormous stress for the next year or two until the Western European economy recovers.

"The unprecedented rise in iron ore and coking coal prices coupled with the acute decline in market demand will continue to negatively impact the company's European operations."

The report also showed that the Rotherham steelworks at Aldwarke was running at around 60% capacity for 2011-12 with actual production of 0.7 million tonnes.

Tata Steel Europe website

Images: Tata Steel Europe


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