* Q4 net income 10.36 bln rupees vs est. 9.64 bln rupees
* Net sales 420.18 bln rupees vs est. 391.9 bln
* Says EU steel use to remain low due to global overcapacity
(Adds details, share price)
NEW DELHI/MUMBAI, May 14 Tata Steel Ltd
said a phase of solid economic growth in Europe was
supporting a recovery in steel demand in its main market, which
also helped the company post results that easily beat analysts'
estimates in the March quarter.
The strong showing in Europe would come as a relief to the
company's new management, which has intensified cost cuts and
focused on high-margin products to cope with softness in the
Tata Steel got a foothold in Europe through its $13 billion
acquisition of Britain's Corus in 2007.
"Europe appears to be entering a phase of solid economic
growth, which is supporting a recovery in steel demand," said
Karl-Ulrich Köhler, chief executive of Tata Steel in Europe,
which is also its biggest production centre.
"But EU steel use will remain at low levels historically
against a background of continuing global overcapacity."
ArcelorMittal, the world's top steelmaker, said
last week that prospects for Europe and the United States were
encouraging and it was cautiously optimistic for the rest of
The recovery in euro zone manufacturing accelerated at the
start of the second quarter with solid growth across most of the
Tata Steel's bigger-than-expected fourth-quarter profit was
also helped by product launches in Europe throughout the year,
30 in total. The volume of new products sold in the region rose
more than 75 percent in 2013/14 compared with a year earlier,
the company said in a statement.
Net income hit a three-quarter high of 10.36 billion rupees
($173 million) in the three months ended March 31, compared with
a year-ago loss. Net sales jumped 23 percent to 420.18 billion
Analysts on an average had expected a profit of 9.64 billion
rupees on sales of 391.9 billion, according to data from Thomson
Expectations of a strong quarter had lifted the company's
shares, which closed up 6 percent at 452.35 rupees before
results were announced. The stock has gained 16 percent since
Tata Steel reported an estimate-trailing third-quarter profit in
Tata Steel, founded in 1907 and part of the Tata group that
also owns British luxury carmaker Jaguar Land Rover, has long
enjoyed strong margins in its Indian operations because it mines
most of the iron ore and coal it needs as raw material.
But a clamp down on illegal iron ore mining and
controversies surrounding allocation of coal mines to private
companies have forced some Indian steel companies to look for
India's Supreme Court is hearing an appeal on illegal iron
ore mining in the state of Odisha, but Tata Steel's Executive
Director Koushik Chatterjee said its mines there were operating
with all necessary clearances.
($1 = 59.7800 Indian Rupees)
(Reporting by Krishna N Das and Siddesh Mayenkar; Editing by
Matt Driskill and David Holmes)