Tata Steel Ltd is preparing to split its European operations in half as it begins talks with Scandinavian steel sheet maker SSAB Sweden to sell its profitable division in the Netherlands. This leaves the UK operations, based in Port Talbot in South Wales, at the mercy of a UK government bailout.
Tata Steel acquired both units when it bought Anglo-Dutch steelmaker Corus Group Plc in 2006 and has spent the next decade and a half coping with slowing demand for steel in Europe, increasing the cost of operations and pension agreements with unions.
₹ 1,635 crore in the second quarter “title =” Tata Steel posted a net profit of ₹ 1,635 crore in the second quarter “>
See full image
“The company has entered into discussions with SSAB Sweden based on the interest received in the possible acquisition of Tata Steel’s Dutch business, including the IJmuiden steelworks,” Tata Steel said in a press release.
“The company has started discussions with the supervisory board and the board of directors of Tata Steel Netherlands and the process will move to the next stage, including due diligence and stakeholder consultations,” he added.
The company is committed to using the proceeds from any strategic restructuring toward further deleveraging of the balance sheet, he said.
“The company has also started the process to separate Tata Steel Netherlands and Tata Steel UK and will follow separate strategic paths for the Dutch and UK businesses going forward,” he said.
“Tata Steel continues its dialogue with the UK government on possible measures to safeguard the long-term future of Tata Steel UK and is also reviewing all options to make the business self-sustaining without the need for any financial support from Tata Steel. India in the future. “
SSAB Sweden also confirmed on Friday that it is interested in acquiring the IJmuiden steelworks and related subsequent assets. Meanwhile, European media have reported that SSAB Sweden is also in talks to acquire Germany’s Thyssenkrupp steel business, Europe’s second-largest steel business by sales.
The European Commission last year blocked a merger between Tata Steel Europe and Thyssenkrupp.
Tata Steel, India’s largest alloy maker, is also simplifying its corporate structure in its local market. The company said it is dividing listed and unlisted subsidiaries into four groups: longs, downstream, mining and utilities and infrastructure.
To this end, Tata Metaliks and Indian Steel and Wire Products will be merged into Tata Steel Long Products, a process that will take six to nine months to complete.
Tata Steel surprised equity markets on Friday when it reported a consolidated net profit of ₹Rs 1,635 crore in the September quarter. That compares with analyst estimates of a measly ₹29.21 crore.
Consolidated revenues stood at ₹Rs 37,154 crore for the quarter, an increase of 7.44% from ₹34,579 crore that reported in the prior year period.
The company produced 6.73mt of steel in the September quarter, recovering to near full capacity utilization in the period after COVID-related lockdowns affected operations in both India and overseas in the April-June period.
Consolidated Ebitda (earnings before interest, taxes, depreciation and amortization) increased 60% year-on-year to ₹6,217 crore, while Ebitda / ton increased by almost 41% to ₹8,396, compared to ₹5,963 in the quarter of the previous year.
The company said its deleveraging plans are on the right track, as it reduced net debt by $ 1 billion in the first half of the fiscal year.
“Tata Steel has delivered strong results in India with broad-based, market-leading volume growth and strong cash flow generation. There has also been a significant improvement in the product mix towards domestic sales and higher value added products and a strong reduction in costs, “said TV Narendran, CEO and CEO.
“In Europe, although the general environment remains challenging and the recovery is more gradual, there has been an improvement in volumes and the sales mix. We are continuing our discussions with the UK government regarding the future strategy of our UK business, “he said.
.
