Tata Steel Q1 profit dives

NEW DELHI, Aug 14 (AFP): Indian giant Tata Steel reported Wednesday that quarterly group net profit slid a bigger-than-expected 70 per cent, hit by one-off charges, but added its European operations were picking up.

Despite a "healthy improvement across geographies", Tata Steel, India's biggest producer, said the performance was not enough to overcome one-time costs which pushed earnings sharply lower than financial market forecasts.

Net profit slid to 3.37 billion rupees ($55 million) in the first financial quarter to the end of June from 11.39 billion rupees a year earlier on sales that climbed 11 percent to 364.27 billion rupees.

The earnings undershot estimates by analysts who had forecast the steel-maker would post net profit of just over nine billion rupees.

"Operating performance improved across all geographies," said the company, part of the sprawling Tata tea-to-cars conglomerate, adding that in Europe it would keep concentrating on reducing expenses and improving operations. But a steep fall in the cost of raw materials such as iron ore and coking coal and more stable steel prices failed to offset one-off costs of 2.62 billion rupees.

"European steel demand is moving in the right direction," said Karl-Ulrich Kohler, chief executive of Tata Steel in Europe, where the company ranks as number-two steel producer.

"Though demand remains well below levels we would regard as healthy, we can see greater stability emerging in the markets we serve," Kohler added.

Tata Steel paid $13 billion in 2007 to buy rival Anglo-Dutch steelmaker Corus, which has plants in Britain and continental Europe, vaulting from 56th-largest steel-maker in output globally to one of the world's largest producers.