Tata Steel sees massive profit slump as European market contracts

STEEL giant Tata Steel has seen profits drop by 89 per cent, according to figures released this week.

Indian-owned Tata, which operates two plants in Rotherham, missed quarterly profit expectations after being hit by weakening demand and prices in its main European market which offset a solid performance at home.

Tata reported a 89 per cent slump in fiscal first-quarter profit after the previous year’s results were boosted by proceeds from a divestment and European demand waned.

The steelmaker, whose European operations account for two thirds of its capacity, said consolidated net profit for the quarter to end-June fell to 5.98 billion rupees from 53.5 billion in the 2011 period which included one-time gains of about 40 billion. Excluding the gains, profit declined about 55 per cent.

Overall, turnover edged up 2.5 per cent to US$6.08 billion dollars (£3.87 billion), but pre-tax profits slumped from US$1.15 billion dollars to 255 million.

The decline in profits was sharper because in the same three month-period in 2011, Tata sold its take in Australian miner Riversdale.

“European steel demand is lower than expected and prices have weakened,” Karl-Ulrich Koehler, head of Tata’s European operations said.

Tata Steel employs more than 2,000 people at four main sites in South Yorkshire.

Its speciality steels business has two sites — the Aldwarke works and Brinsworth Strip Mill — in Rotherham and one in Stocksbridge, near Sheffield.

It also has a research and development facility at Swinden Technology Centre in Rotherham.

Tata Steel employs a further 4,000 people at its steelworks in Scunthorpe, North Lincolnshire.

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