* Q1 net profit 5.98 bln rupees, vs 6.7 bln estimate
* Europe deliveries down 9.5 pct, India sales up 13 pct
(Adds detail, CEO comment)
By Prashant Mehra
MUMBAI, Aug 13 Indian group Tata Steel
has missed quarterly profit expectations, hit by weakening
demand and prices in its main European market which offset a
solid performance at home.
The steelmaker, whose European operations account for two
thirds of its capacity, said on Monday consolidated net profit
for the quarter to end-June fell to 5.98 billion rupees ($108
million) from 53.5 billion in the 2011 period which included
one-time gains of about 40 billion.
Excluding the gains, profit declined about 55 percent.
"European steel demand is lower than expected and prices
have weakened," Karl-Ulrich Koehler, head of Tata's European
Tata Steel, whose steel deliveries in Europe fell 9.5
percent, has been countering poor market conditions with tight
cost control and a focus on product differentiation, he said.
Steelmakers are struggling globally because of the debt
crisis in Europe, weak growth in Japan and a slower pace of
expansion in China, the world's largest producer and consumer.
ArcelorMittal, the No.1 steelmaker, said last
month its European steel demand may fall 3-5 percent this year.
Q1 PROFIT SLUMP
Tata Steel's first-quarter missed analyst expectations. A
Reuters poll of brokerages had forecast net profit of 6.7
billion rupees on net sales of 328.2 billion.
Consolidated net sales rose 2 percent to 335.5 billion
rupees, helped by gains in Asia. Consolidated operating margins
fell to 10.6 percent from 15.4 percent.
Sales at its Indian operations rose 13.3 percent to 88.2
billion rupees as demand and prices remained firm in Asia's
It reported flat sales volumes in India during the June
quarter at 1.59 million tonnes.
The company held net debt of $9.7 billion at end-June --
much of this resulting from its $13 billion acquisition of
Anglo-Dutch steelmaker Corus in 2007. It had reported net debt
of $8.6 billion at end-March.
Last month, Moody's and S&P both cut their outlook on Tata
Steel to negative from stable.
Shares in Tata Steel, valued at $7 billion, closed down 1.2
percent ahead of the earnings announcement. The stock is up 18
percent in 2012, outperforming a 13 percent rise in the
(Editing by Dan Lalor)