The FINANCIAL — The Tata Steel Group today declared its consolidated financial results for the financial year and fourth quarter ended March 31, 2014.
The FINANCIAL — The Tata Steel Group today declared its consolidated financial results for the financial year and fourth quarter ended March 31, 2014. There was a marked improvement in profitability as the group’s net profits for the fourth quarter ended March 31, 2014, rose to Rs1,036 crore from Rs503 crore in the previous quarter. Similarly, for the full year ending March 31, 2014, the underlying net profit came in at Rs3,623 crore compared to the underlying profit of Rs332 crore for the year ended March 31, 2013. The improvement in the underlying profitability over the last year was Rs3,290 crore. The improved and steady performance of operations across geographies, despite weak market conditions, led to this significantly improved group performance, according to Tata Sons Ltd.
India
Performance of the Indian operations improved significantly despite the weak macroeconomic environment. There were significant achievements in terms of operations and financial performance.
Europe
The revamped blast furnace in UK together with improved reliability in Europe as a whole led to an increase in volumes compared to the previous year. Financial performance consequently improved, despite average market conditions being worse than in the previous year. Sales volumes also grew, as did the quality profile. The volume of new products sold rose by more than 75 percent in FY’14 compared to the previous year and the company launched 30 new products, as promised, according to Tata Sons Ltd.
Progress on improving the product and service portfolio, including success in early vendor involvement initiatives led to the company improving its standing with its customer base which was expressed through numerous customer recognition awards, such as Toyota awarding Tata Steel its certificate of recognition for the company's contribution in the area of quality.
South East Asia
The South East Asian operations reported steady performance on the back of operational improvements, cost reduction and restructuring despite severe import pressures in the region and continued political uncertainty in Thailand.
Financial performance analysis
Consolidated financial results summary (under Indian GAAP) for the financial year and fourth quarter ended March 31, 2014.
“It’s been a high-performance year at Tata Steel and a more gratifying one as we performed well against challenging market conditions both in India and South East Asia," said TV Narendran, managing director of Tata Steel India and South East Asia. "We have performed better than industry growth figures across product / market segments with substantive increase in sales volumes. Sale of high-end products to the automotive segment has been the highest ever despite a decline in growth in the auto market in India. Our efforts to develop new markets in the SME segment with an innovative business model has enabled a significant increase in sales of branded HR coils. We continue to spread our presence by strengthening our reach and customer connect through the retail route. Our focus remains on increasing value-added downstream operations and delivering quality and innovative products / services across all verticals of our business. Our brown-field expansion of 2.9mtpa in Jamshedpur fully ramped up in the second half, resulting in record high production of crude and saleable steel notwithstanding our scheduled maintenance shutdowns in Q3," Narendran added.
“The performance of our South East Asian operations continue to remain strong and have delivered positively to the overall bottom line of the company. We look forward to continuing on this growth trajectory and are focused on efficient execution of our expansion projects,” Narendran said.
“The key to last year was our relentless focus on operational reliability, which restored our asset base and enabled our production to return to more usual levels. Our financial performance improved as a result. At the same time we advanced our high-quality portfolio programme, launching 30 new products as promised and increasing sales of new products by more than 75 percent. By intensifying our innovation efforts, our sales to automotive manufacturers grew against trend — a third of these sales were differentiated products which helped customers deliver cost, weight and performance improvements," Dr Karl-Ulrich Kohler, MD and CEO of Tata Steel Europe, said.
“Europe appears to be entering a phase of solid economic growth, which is supporting a recovery in steel demand. But EU steel use will remain at low levels historically against a background of continuing global overcapacity. Faced with these challenges we will intensify our efforts to achieve sustainable financial performance by continuing to improve the support and services we offer our customers and maintaining our focus on costs and operational efficiency,” he added.
“Group profitability showed sustainable improvement over the year on the back of strong performance in key regions. Despite weak market conditions in India, our business achieved higher sales and generated a higher EBITDA margin of 32 percent for the year. Our European operations also showed a strong recovery over FY’13, with higher volumes and an improvement in EBITDA margins by 257bps over the year. We spent around Rs16,400 crore on capex during the year, with a large portion deployed at our greenfield plant in Odisha. Despite this significant spend, we were able to keep the net debt level stable over the last quarter. Liquidity remains adequate with around Rs18,000 crore of cash and cash equivalents and undrawn credit lines, in addition to the undrawn KPO financing,” Koushik Chatterjee, group executive director, finance and corporate, said.
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