Tata Steel Apr-Jun sales rise but net profit down due to EBITDA fall

25 Jul 2022

Tata Steel Ltd’s operating profit for the quarter ended June fell bringing down the net profit along with it. Input costs surged ahead of sales growth and hit the operating profit and operating margin.

The consolidated net profit fell nearly 13% on the year to 77.6 bln rupees in Apr-Jun. It was marginally above analyst estimates of 77 bln rupees.

The net profit fell despite a good growth of nearly 19% in consolidated revenue from operations to 634.3 bln rupees.

A surge in Tata Steel’s input costs took a toll on its consolidated operating profit which fell 7% on the year to 149.8 bln rupees. The operating profit was calculated as total expenses after excluding the depreciation charge and finance costs.

The operating margin contracted sharply to 23.6% in Apr-Jun from 30.1% a year ago.

Tata Steel’s executive director and chief financial officer Koushik Chatterjee said that there was a sharp rise in input costs especially coking coal and gas prices in Europe.

The company said that its sales volume from domestic operations were down 2% on the year due to moderation in exports following the imposition of 15% export duty.

It said that in the June quarter global steel prices moderated on slowdown in global growth.

The impact on Tata Steel’s profitability would have been worse had coking coal prices not declined by 40% to around $300 per tn at the end of June from #530 in April.

“We expect that volatility in terms of steel price and input cost movement to continue in the next quarter but expect the spreads to stabilise in the second half of the year,” Chatterjee said.