News: $1.6bn writedown for Tata Steel
Tata Steel, the Indian-owned steelmaker, has announced a $1.6 billion writedown on its assets, mainly on the European operations that have suffered from a market slowdown and rising raw material prices since Corus joined the Tata Steel family in April 2007 in a £6 billion transaction.
A write down reduces the book value of an asset if its is overstated compared to current market values. The review was carried out in preparation of the company's full year results that are due later this month.
The review was undertaken "taking into account the external economic environment and macroeconomic conditions especially in Europe, the underlying demand - supply imbalance of the global steel industry and the prudent view of the forecast of the businesses."
Just over 2,000 people are employed at Tata Steel in South Yorkshire and sites including Stocksbridge and Aldwarke specialise in the production of high grade and special steels for the world's leading companies in markets ranging from automotive to aerospace, civil engineering to component manufacturing, energy industries to consumer goods. Narrow strip is produced at Brinsworth.
The speciality steels business is performing well but the latest statement from Tata highlights that "apparent steel demand has fallen significantly in 2012-13 by almost 8% which in aggregate results in almost 30% since the emergence of the global financial crisis in 2007."
The steelmaker added that it expects the "conditions to continue over the near and medium term, and has led to the downward revision of cash flow expectations underlying the valuation of the European business."
Tata Steel Europe's EBITDA (earnings before tax) fell to $349m for the financial year ending March 31, 2012. This was down from $922m in the previous year. The fall in earnings was despite turnover in Tata Steel Europe for the year increasing to $16.15 billion from $14.52 billion and sales increasing by 3.7%.
Tata Steel posted a loss for its European operation of £51.2m for the third quarter of 2012/13, down from an £5.2m loss the previous quarter but up from a £93.2m loss in the same quarter last year.
The writedown will do little to quell rumours from the Indian sub-continent that Tata Steel is planning to sell of some of its UK assets to reduce its debt burden.
The UK management of Tata Steel dismissed the claims, as they did the reports last month that Tata was preparing to close UK research and development facilities on Teesside and in Rotherham over the next 18 months.
Michael Leahy, general secretary of Community, the union, said: "Time and time again when these reports emerge, we have received assurances from Tata Steel they have no plans to cut back on investment in the UK or close plants. That said, they are clearly of concern to the workers and their families. Therefore today I am calling for an urgent meeting of the Tata Steel European Works Council with Chief Executive, Karl Kohler in attendance, to get a clear statement from the company on the future of its European operations and the UK in particular."
Tata Steel website
Images: Tata Steel
A write down reduces the book value of an asset if its is overstated compared to current market values. The review was carried out in preparation of the company's full year results that are due later this month.
The review was undertaken "taking into account the external economic environment and macroeconomic conditions especially in Europe, the underlying demand - supply imbalance of the global steel industry and the prudent view of the forecast of the businesses."
Just over 2,000 people are employed at Tata Steel in South Yorkshire and sites including Stocksbridge and Aldwarke specialise in the production of high grade and special steels for the world's leading companies in markets ranging from automotive to aerospace, civil engineering to component manufacturing, energy industries to consumer goods. Narrow strip is produced at Brinsworth.
The speciality steels business is performing well but the latest statement from Tata highlights that "apparent steel demand has fallen significantly in 2012-13 by almost 8% which in aggregate results in almost 30% since the emergence of the global financial crisis in 2007."
The steelmaker added that it expects the "conditions to continue over the near and medium term, and has led to the downward revision of cash flow expectations underlying the valuation of the European business."
Tata Steel Europe's EBITDA (earnings before tax) fell to $349m for the financial year ending March 31, 2012. This was down from $922m in the previous year. The fall in earnings was despite turnover in Tata Steel Europe for the year increasing to $16.15 billion from $14.52 billion and sales increasing by 3.7%.
Tata Steel posted a loss for its European operation of £51.2m for the third quarter of 2012/13, down from an £5.2m loss the previous quarter but up from a £93.2m loss in the same quarter last year.
The writedown will do little to quell rumours from the Indian sub-continent that Tata Steel is planning to sell of some of its UK assets to reduce its debt burden.
The UK management of Tata Steel dismissed the claims, as they did the reports last month that Tata was preparing to close UK research and development facilities on Teesside and in Rotherham over the next 18 months.
Michael Leahy, general secretary of Community, the union, said: "Time and time again when these reports emerge, we have received assurances from Tata Steel they have no plans to cut back on investment in the UK or close plants. That said, they are clearly of concern to the workers and their families. Therefore today I am calling for an urgent meeting of the Tata Steel European Works Council with Chief Executive, Karl Kohler in attendance, to get a clear statement from the company on the future of its European operations and the UK in particular."
Tata Steel website
Images: Tata Steel
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