Tata Steel surprises with impressive quarterly profit

Tata Steel, the second-largest steel producer in India by market value, has exceeded analysts' expectations with its latest quarterly figures. The profitable trajectory resulted from lower costs and higher sales volumes in India and the Netherlands, which offset the sharp decline in steel prices. In the second quarter, Tata Steel achieved a consolidated net profit of 8.33 billion rupees (approximately $99 million). This significantly surpassed the average analyst forecast of 2.23 billion rupees. In contrast, the company recorded a loss of 61.96 billion rupees in the previous year, which was attributed to a charge of 63.58 billion rupees due to the restructuring of the Port Talbot plant in Wales. Tata Steel Netherlands was able to increase its liquid steel production by 28% to 1.57 million tons, while deliveries in India rose by approximately 6%. Due to lower energy costs and increased sales, the Dutch division achieved a core profit of 17.85 billion rupees, compared to a loss in the previous year. The company's consolidated core profit margin rose in the second quarter from 8% the previous year to 12%. At the same time, input costs decreased by 1.4% to 201.87 billion rupees, as prices for key raw materials such as iron ore and coking coal declined. Although demand in India was sluggish due to unusually high rainfall hindering construction activities, CEO T.V. Narendran remains optimistic. The pressure on domestic steel prices from cheap imports could not overshadow the improved demand. Macroeconomic factors in China continued to weigh on global commodity prices, including the steel sector. As early as August, consulting firm BigMint reported that steel prices in India had fallen to their lowest level in over three years. Tata Steel's revenue fell by 3.2% in the second quarter to 539.05 billion rupees but was still above estimates of 537.34 billion rupees.