Tata Steel on Monday reported a decline of nearly 89 per cent in its consolidated net profit to Rs 597.88 crore for the quarter ended June 30, 2012 due to slackening metal demand and lower realisations in the European markets.
The Tata Group flagship firm had posted a net profit of Rs 5,346.55 crore in the corresponding quarter of the previous fiscal, which had included a one-off profit of Rs 3,362 crore on selling investments, it said in a filing to the BSE.
However, as compared to the last quarter of FY'12, Tata Steel fared better as it had reported a net profit of Rs 433.46 crore for the January-March period.
Net sales of the company, however, was up 1.89 per cent to Rs 33,547.73 crore during the quarter vis-a-vis Rs 32,925.68 crore of the April-June quarter of 2011-12.
"European steel demand is lower than expected and prices have weakened. We continue to seek to mitigate the effects of this with tight cost control and emphasis on increased product differentiation," Tata Steel Europe Managing Director and & CEO Karl-Ulrich Kohler said in a statement.
Tata Steel Europe (formerly known as Corus) reported a decline of over 67 per cent in its core profits (EBITDA) to $111 million in the April-June period as compared to $343 million a year ago.
However, on a quarter-on-quarter (QoQ) basis, its EBITDA improved as the steelmaker had earned $26 million in the fourth quarter of the previous fiscal.
Kohler added that the company's financial performance has been improving in the last few months as raw material cost pressures have eased and the cost cutting initiatives have yielded results.
However, company's auditors, Deloitee Haskins and Sells, have pointed out in their review report for the quarter that the company would have made a net loss of Rs 841.91 crore, had it recognised actuarial valuation changes.
The Tata group firm has recognised actuarial valuation change of Rs 1,439.69 crore, which is net of tax and made on the pension plans of Tata Steel Europe, into "reserves and surplus" segment, while citing accounting standards.
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