Mumbai, November 11, 2021
Highlights:
▪ Consolidated adjusted EBITDA increased 12%QoQ to Rs.17,810 crores. Consolidated Profit after tax improved 28%QoQ and 7.5x YoY to Rs.12,548 crores.
▪ Consolidated Free Cash Flow was Rs.3,322 crores during 2QFY22 despite an increase in working capital of Rs.3,889 crores and dividend payment of Rs.3,020 crores.
▪ The company spent Rs.2,191 crores on capex during the quarter, work on the Pellet plant, the Cold Roll Mill complex and the 5 MTPA expansion at Kalinganagar is ongoing.
▪ Gross debt decreased to Rs.78,163 crores with repayments of Rs.11,424 crores in 1HFY22. Net debt declined to Rs.68,860 crores. Net debt to EBITDA improved to 1.21×1; Net debt to equity improved to 0.79x.
▪ Tata Steel has achieved Investment grade credit metrics; the credit rating has been upgraded by S&P Global Ratings to ‘BBB-‘ with stable outlook.
▪ India2 operations –
o Crude steel production increased by 2.2%QoQ and 3.1%YoY to 4.73 mn tons.
o Overall deliveries increased by 11%QoQ to 4.58 mn tons despite market demand contraction amidst seasonal weakness. Sales volume to Automotive segment increased by 18%QoQ despite semiconductor shortage driven weakness in the sector.
o Quarterly adjusted EBITDA stood at Rs.13,877 crores with 2.1%QoQ and 2.3x YoY growth; Profit after tax stood at Rs.8,843 crores.
o Tata Steel Standalone3 registered highest ever quarterly adjusted EBITDA at Rs.13,574 crores in 2QFY22 with 4%QoQ and 2.3x YoY growth. Tata Steel Long Products registered quarterly EBITDA of Rs.302 crores.
▪ Revenues at Tata Steel Europe increased by 11%QoQ and 50%YoY to £2,108 million in 2QFY22. EBITDA improved 2.2x QoQ to £328 million which translates to an EBITDA per ton of £153.
▪ Tata Steel is pursuing the hydrogen route in IJmuiden and a detailed assessment is underway. This involves the introduction of direct reduced iron (DRI) technology which can make iron using natural gas or hydrogen, before it is converted to steel.
▪ Tata Steel has completed the divestments of its 100% stake in NatSteel Holdings Pte. Ltd. Singapore.
▪ The merger of Tata Steel BSL with Tata Steel has been approved by the hon’ble NCLT, Mumbai bench; the appointed date for the merger is 1st April 2019.
Management Comments:
Mr. T V Narendran, Chief Executive Officer & Managing Director:
“Tata Steel has delivered strong results across key geographies in this seasonally weaker quarter. Our steel deliveries in India expanded by 11% despite a contraction in market demand which is a testament to the strength of our franchise. We continue to drive value accretive growth in our chosen segments and our performance in key
segments such as auto was very robust despite the sector being impacted by the semiconductor shortage. Our European operations have also delivered robust performance underpinned by strong improvement in realizations.We are watchful of the elevated coal prices and high energy cost as key risks to margins going forward.
We took another step in our sustainability journey and commissioned 5 TPD CO2 capture plant at Jamshedpur; first in India by a Steel company to extract CO2 directly from Blast Furnace gas. We continue to progress on our stated goals of expanding and consolidating our operations in India. Our 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is progressing well and the merger of Tata Steel BSL with Tata Steel will be completed shortly. We have recently won the high quality Gandhalpada iron ore mines which helps us achieve raw material security beyond 2030. In line with our capital allocation strategy, we recently exited our operations in Singapore through the sale of NatSteel.”
Mr. Koushik Chatterjee, Executive Director and Chief Financial Officer:
“Tata Steel posted its highest ever underlying quarterly performance with EBIDTA and Profit after Tax of Rs 16,618 crores and Rs 12,548 crore on the back of strong operating and market performance across all geographies including Europe.
This translates into a consolidated EBIDTA Margin of 27.6% and PAT margin of 20.8% for the quarter. The operating cash flows continue to be strong despite working capital pressure due to price effect on coal price increase in recent months. We signed and closed the divestment of our 100% holding in NatSteel Holdings in this quarter to realise around Rs.1,200 crore that resulted in a realised gain of Rs 720 crores for the quarter.
As part of our enterprise strategy, we continue to deploy the free cash flows for de-leveraging the balance sheet with Rs.11,424 crore of debt repayment in the first half of the current financial year and are targeting additional, aggressive deleveraging in the second half as well.
The financial metrics of the company are now at investment grade levels and we are happy to note that the Standard & Poor has upgraded Tata Steel to investment grade level of BBB-.”
