MUMBAI Tata Steel Ltd swung to a hefty third quarter loss on Thursday, blaming cheap Chinese imports for having to axe 3,000 jobs at its UK unit, as it tries to slim down to cope with the global steel crisis.
The European business of Tata Steel, the parent company of Britain's largest and Europe's second-largest steel producer, has cut thousands of jobs since it bought Anglo-Dutch producer Corus in 2007.
Last month, the company, a unit of India's diversified Tata Group conglomerate, said it would cut 1,050 UK jobs on top of 1,200 announced in October. A total of 3,000 jobs will be lost including other measures announced this year.
"We are witnessing significant unfairly priced imports into countries like the UK, India and South East Asia which has disrupted the pricing discipline in most markets," said Koushik Chatterjee, group executive director for finance and corporate.
Mumbai-headquartered Tata Steel posted a net loss of 21.27 billion rupees ($314.5 million) in the quarter ended Dec. 31, against a net profit of 1.57 billion rupees in the same period a year ago.
Sales fell 16.5 percent to 280.39 billion rupees as prices dropped, reflecting the availability of cheaper imported steel mainly from China in Europe and India.
China makes nearly half the world's 1.6 billion tonnes of steel, and exported over 100 million tonnes of the alloy last year, more than four times the 2014 shipments from the European Union's largest producer, Germany.
The company took a one-time charge of 7.11 billion rupees on its European operations due to a non-cash write down of fixed assets and restructuring provisions. It also took a charge for staff cuts in India.
Chatterjee said the business conditions for the global steel industry were "extremely challenging" due to elevated imports across regions, currency headwinds and subdued market sentiment.
Its EBITDA (earnings before interest, tax, depreciation and amortization), a key gauge of profitability, dropped by over 70 percent, mainly due to Tata Steel's Europe unit that accounts for a little over half of its total revenues and production.
The European business of the company posted an operating loss of 6.75 billion rupees.
"Growing European steel demand continues to be undermined by a flood of imports into the region," said Karl-Ulrich Köhler, CEO of Tata Steel in Europe, adding Chinese steel shipments into Europe grew more than 50 percent last year.
"These changes will continue to be a core focus in a bid to improve our competitiveness and enable us to concentrate on supplying higher-value products to customers."
Elsewhere in Europe, ArcelorMittal said it was reviewing the future of a major steel export plant in South Africa, also blaming cheap imports from China.
($1 = 67.6250 Indian rupees)
(Reporting by Promit Mukherjee; Editing by Sumeet Chatterjee and Elaine Hardcastle)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: Feb 04, 2016 11:45 pm | Updated Date: Feb 04, 2016 11:45 pm