Tata SteelNSE -3.72 % said consolidated net profit in the June quarter fell 64.5 per cent to Rs 683.13 crore from 1,922.85 crore a year ago, due to higher expenses.
Analysts in an ET NOW poll had projected a profit of Rs 1,424 crore.
Total revenue came in at Rs 35,947.11 crore, up marginally from Rs 35,846.92 crore. Analysts were expecting a revenue of Rs 37,489 crore.
Consolidated Ebitda aggregated to Rs 5,377 crore. Consolidated margins dipped 15 per cent from 17 per cent a year ago.
“During the quarter, steel prices across geographies declined with weakening economic activities and uncertainty around the ongoing US-China trade conflict, the company,” said adding this coincided with a sharp rise in iron ore prices due to supply disruptions and elevated coking coal costs.
As a result, steel spreads dropped by around$ 80-100 tonnes in the key markets.
In India, steel prices declined as subdued economic activity, seasonal slowdown and liquidity issues weighed on domestic consumption.
Higher net imports further exacerbated the demand supply balance. In Europe, the steel industry faces significant headwinds in terms of lower economic growth, uncertainty around Brexit and the trade conflict. This coupled with rising share of imports and elevated raw material prices has led to a sharp decline in steel spreads.
In this business environment, the company delivered a 11 per cent yoy volume growth for production and 5 per cent yoy for deliveries, it said in the release.
“The steel sector is facing significant headwinds which has affected spreads and overall profitability. However, our strong business model in India has helped us counter the overall market weakness, including the slowdown in the automotive sector, by growing volumes in multiple customer segments,” said T V Narendran, CEO and Managing Director, Tata Steel.