Beating forecast: Tata Steel profits jump
INDIA’S Tata Steel, the world’s eighth-largest steel maker, said yesterday stronger demand from the automobile and infrastructure sectors sent quarterly profits soaring at its local operations. It said net profit jumped a forecast-beating 155 per cent to Rs11.9bn ($258m/£160m) for the three months to December from Rs4.66bn ($86m/£53m) in the same period a year earlier. Analysts had expected the company’s fiscal third-quarter net profit to be around Rs10bn ($216m/£134m). Tata Steel, which bought British-Dutch company Corus for $13.7bn (£8.4bn) in 2007, said in a statement net sales rose 33 per cent to Rs63.07bn ($13.6bn/8.4bn) . The earnings data does not include figures from Corus. Tata Steel said consolidated earnings, including international operations, would be announced in February. Steel production in the quarter rose 36 per cent to 1.68 million metric tonnes, the company said. Tata Steel and Japan’s giant steel producer Nippon Steel Corp meanwhile announced a tie-up for a venture to manufacture steel sheets for automobiles in eastern India as sales of vehicles surge in the South Asian country. Tata Steel will hold 51 per cent and Nippon Steel the balance stake in the venture, which will be located in Tata’s Jamshedpur factory complex in eastern India. The plant is aimed at meeting increased demand from India’s fast-growing automobile industry, where car sales jumped 19 per cent in 2009. “The joint venture aims to capture growing local demand for high-grade automotive cold-rolled flat products,’ Tata Steel said. The two sides hope to wrap up a formal deal this year and operations would start in 2013, the statement said. Analysts said they expected Tata’s financial performance to continue to improve. “Demand for steel products is on the rise,” said Gaurang Shah, vice-president of Geojit BNP Paribas Financial Services. Apurva Shah, head of research at brokerage Prabhudas Lilladher, said demand for steel was improving but added that “runaway growth is unlikely.” Domestic steel giants such as Steel Authority of India (SAIL) and Tata Steel have raised prices of steel products in the past two months in line with the firming of international steel prices.
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