BENGALURU (Reuters) – India’s Tata Steel reported a third-quarter profit on Wednesday, as declining expenses more than offset lower revenue due to weak domestic prices.
Subdued local prices due to cheaper shipments from top producer China hurt the country’s steelmakers in the October-December period, despite sustained domestic demand.
The quarter partly coincided with an eight-month period when Chinese steel shipments reached 5-year high, turning India into a net importer.
The company posted a consolidated net profit of 5.13 billion rupees ($61.8 million) compared to a year-ago loss of 22.24 billion rupees.
Despite domestic production volumes growing 7%, Tata Steel’s revenue fell over 3% to 553.12 billion rupees on account of weak domestic steel prices.
However, expenses slipped nearly 7%, as costs of raw materials fell more than 22%. Analysts at Antique Broking said higher prices of coking coal prices, a key steel-making ingredient, is factoring in with a lag.
“During this quarter, China exported between 7 to 8 million tons of steel every month, which is the highest since 2015 and this has adversely impacted global steel prices as well as profitability,” CEO T V Narendran said in a statement.
The company also took restructuring and employee separation compensation charges of 3.13 billion rupees and 236.5 million rupees in the quarter, respectively.
The charges are in relation to a deal it signed last September with the British government to decarbonise its Port Talbot site, which would axe up to 2,800 jobs.
The company is aware of the impact of its proposal to wind down Port Talbot on individuals and the local community, it said.
Shares of Tata Steel ended nearly 4% higher ahead of results.
($1 = 83.0580 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Varun H K)