Surprise rise: Tata Steels shares upshoot
TATA STEEL shares jumped yesterday after the Indian company posted a third-quarter profit, defying analyst forecasts that weak demand would push the world’s sixth-largest steelmaker into a loss. Consolidated net profit for the three months to December 2008 tumbled 44 per cent to Rs7.32bn ($146m/£102m) from Rs13.11bn ($256m/£179m) the same period a year earlier. “Our marketing initiatives and cost rationalisation measures are beginning to show results,” B. Muthuraman, Tata Steel managing director, told reporters in Mumbai, India’s financial hub. The results included those of Anglo-Dutch group Corus, which the company bought in 2007 for $13.7bn and has been buffeted recently by sharp declines in steel prices. Tata Steel shares jumped 5.6 per cent after the unexpected profit was announced, bucking a 0.7 per cent decline in Mumbai’s benchmark Sensex share index. Consolidated net sales at the company, part of the sprawling tea-to-trucks Tata Group, rose four per cent to Rs331.9bn ($648m/£453m). In January, India’s biggest steel producer said stand-alone net profit for the three months to December - not including Corus - fell by more than 50 per cent. Apurva Shah, head of research at brokerage Prabhudas Lilladher, called Tata Steel’s profit “surprising”. “We have seen steel prices and demand improve across some Asian markets... (and) this trend is set to continue,” he said. Muthuraman highlighted a recovery in demand for long-steel products. “We expect to sell 1.6 million tonnes of steel in the January-March quarter. This is a nearly 50 per cent rise in volumes (from the third quarter),” he added. The company has trimmed costs and will not increase capital expenditure “in the near-term”, the managing director added. More cost-cutting is also in the pipeline for Tata Steel’s British unit, Corus. Europe’s second-biggest steelmaker said last month it would slash 3,500 jobs worldwide, mainly in Britain, out of a global total of 42,000. Corus said the job cuts, prompted by the global downturn, are aimed at saving £200m ($276m) a year.
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