* Q2 consolidated net profit at 9.17 bln rupees vs 3.67 bln
* Higher prices market share in India helps, Europe ops
* Says European market continues to be challenging
(Adds comments, details)
By Krishna N Das and Devidutta Tripathy
NEW DELHI, Nov 13 India's Tata Steel Ltd
reported a sharply higher-than-expected second-quarter
profit, helped by a rise in prices and market share at home but
it said Europe was still challenging despite an improving
Europe is Tata Steel's top market and production centre, but
it has struggled there since gaining an entry through its $13
billion acquisition of Corus in 2007.
However, the company said its operations in the region were
stabilising and production there grew sequentially some 3
percent in the three months to Sept. 30. Quarterly operating
income from the region improved to 5.54 billion rupees, compared
with an operating loss of 400 million rupees a year earlier.
"The investments in our asset base are proving their worth
in what continues to be a challenging market," Karl-Ulrich
Köhler, chief executive of Tata Steel's European operations,
said in a statement.
July-September consolidated net profit, after minority
interest and share of associates, was 9.17 billion rupees ($144
million), compared with a loss of 3.64 billion rupees a year
earlier, Tata Steel said.
Net sales at the company, the second-largest steel producer
in Europe, rose 7.4 percent to 363.7 billion rupees. Analysts
had expected a profit of 3.67 billion rupees on revenue of
332.74 billion rupees, according to Thomson Reuters I/B/E/S.
European steel demand is expected to pick up slowly in the
third quarter and to continue to grow as steel-using sectors
recover, said the company, which is trying to cut costs and
focus on high-margin products.
Tata Steel said last month it may cut about 500 jobs in the
UK under plans to restructure the part of its business supplying
construction and engineering industries.
Last month it won a contract to supply Britain's Network
Rail with more than 95 percent of its rails for at least five
years. The contract is significant for the company following a
$1.6 billion writedown announced in May mainly due to weak
demand in Europe.
Signs of a turnaround for Tata Steel in Europe comes after
ArcelorMittal SA, the world's largest steelmaker, with
44 percent of crude steel production capacity in the region,
said on Nov. 7 a two-year slump was over and prospects for 2014
were looking up.
Tata Steel's European operations "surprised us positively
with better-than-expected volumes and profitability", Bhavesh
Chauhan, an analyst at Mumbai brokerage Angel Broking, said.
"STEADY" INDIA OPERATIONS
In India, Tata Steel said a weak economy may affect demand
from steel-consuming sectors, although volumes were steady
during the quarter despite the seasonal effects of monsoon rains
and weak macroeconomic conditions.
Tata Steel has raised prices in its home market and gained
market share as a weak rupee curbed imports. It said a new steel
plant being built in eastern India was making "good progress".
Tata Steel's shares closed 1.5 percent higher before the
results were announced, in a Mumbai market that fell 0.5
percent. The shares have risen more than 7 percent since the
Indian steel stocks are the worst performers in the
Asia-Pacific region so far this year, according to Thomson
Reuters data. Tata Steel's net debt of 643.34 billion rupees is
the highest among the six top steel companies in India.
($1 = 63.6375 Indian rupees)
(Additional reporting by Tripti Kalro in Bangalore; editing by