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India’s Tata Steel 4Q profit up 41 percent, lags forecasts

May 18th, 2007

MUMBAI (AFP) - India’s largest steelmaker Tata Steel, part of the Tata group conglomerate, said fourth-quarter net profit climbed by 41 percent, lagging analysts’ forecasts, as raw material costs rose.

Net profit for the quarter ending March 2007 rose to 11.03 billion rupees (270 million dollars) on sales, which increased 21.5 percent to 50.6 billion rupees.

Analysts had forecast net profit of 11.84 billion rupees.

Full-year net profit rose 20.4 percent to 42.22 billion rupees (1.03 billion dollars) on sales, which grew 16.25 percent to 179.85 billion rupees.

During the year, the firm bought Anglo-Dutch steel group Corus in a 13.7-billion-dollar deal, catapulting it to sixth-largest global steelmaker from 56th.

Tata Steel said it completed its acquisition of Corus on April 2 this year.

Quarterly earnings were hit by rising raw material costs, particularly input costs for iron ore and zinc, along with rising freight rates, the company said.

“Freight rates and the cost of raw materials was not as good as it could be,” B. Muthuraman, managing director of Tata Steel, said.

“Steel companies will have to find ways to improve margins, considering the rising costs,” he told India’s NDTV television network.

Iron ore and metal prices, along with freight costs, “are likely to remain high, partly offset by lower coal prices in 2007,” the company said.

“Steel prices increased in the first quarter and are expected to remain high in the second half across most markets,” it added.

Tata Steel said in a statement that steel production rose during the full year by nine percent to 4.93 million tonnes.

The company forecast global steel demand for the year would rise by 5.9 percent to 1.179 billion tonnes.

The merged Tata Steel-Corus company, with steel production of 25.6 million tonnes annually, will be “a compelling vision in steel” with an increased market presence and a lower-costs advantage, Tata Steel said.

“The combine will be better equipped to face intensifying competition arising from consolidation in the industry globally,” Tata Steel said.

Source : Business Standard

Entry Filed under: minerals and metals