BEIJING: Tata Steel Ltd, Europe’s second-largest steel producer, said on Thursday it will press ahead with cost cuts and restructuring to cope with a surge in cheap Chinese exports to Europe and India, its two key markets.
Tata, which posted a surprise 22 percent rise in second-quarter net profit after selling some non-essential holdings, is trying to revive its struggling British operation and has cut thousands of jobs since buying Anglo-Dutch Corus in 2007.
“We have seen huge pressure on (steel) prices ongoing and the strong pound has exasperated the point,” Karl-Ulrich Koehler, CEO of Tata Steel in Europe, told reporters. “Our focus on cost reductions and restructuring will have to continue.”
Koehler said Tata would look at all options for its European long products business.
The crisis in Britain’s steel sector escalated last week as Tata Steel blamed its decision to cut British jobs on a flood of cheap imports, particularly from China, as well as tumbling steel prices.
Net profit at Tata Steel, a division of a hotels-to-automobiles conglomerate, rose to 15.29 billion rupees ($232.9 million) on a consolidated basis in the quarter ended Sept. 30 from 12.54 billion rupees a year earlier.
Analysts had forecast a net profit of 11.8 billion rupees, according to data compiled by Thomson Reuters.
Tata’s profit was boosted by 28 billion rupees earned from the sale of quoted investments during the quarter, including part of its stake in Tata Motors.
Tata also said the “rapid and sharp deterioration” in the British business environment had forced it to take a non-cash charge in the period which, together with restructuring charges and other provisions, totalled 87 billion rupees.
China makes nearly half the world’s 1.6 billion tonnes of steel. With growth slowing at home, it is expected to export a record 100 million tonnes to world markets this year to help address its spare steel making capacity.
India imposed a 20 percent import tax on some steel products in September to mitigate the damage to domestic companies.
