MUMBAI - India's Tata Steel Ltd, the world's No. 6 steel maker, on Thursday missed forecasts with a 60 percent drop in consolidated net profit for the fiscal year ended March and said 2,045 jobs in Europe units were at risk.
It said its Anglo-Dutch Corus Unit was starting consultations on job cuts due to the continued deterioration in market conditions and falling demand.
The recession in world demand looks deeper than what we thought six months ago, Managing Director B.Muthuraman told a news conference.
Global steel production has tumbled this year, as demand in key steel consuming sectors such as construction and automotive shrank, forcing steelmakers such as Arcelor Mittal (ISPA.AS) to sharply reduce capacity.
In April, the World Steel Association forecast steel demand would tumble 15 percent in 2009, its steepest fall since World War II. [ID:nLR431360]
Tata Steel reported a net profit after minority interest and share of profit of associates of 49.5 billion rupees ($1.02 billion) in 2008/09, compared to a consolidated net profit of 123.5 billion rupees reported a year ago.
Consolidated net sales for the year rose to 1.46 trillion rupees from 1.31 trillion rupees reported a year earlier.
That compared with a forecast for net profit of 84.23 billion rupees, on net sales of 1.5 trillion in a Reuters poll of six brokerages.
Tata Steel did not release quarterly figures. A Reuters calculation showed it suffered a consolidated loss of about 45.4 billion rupees in the January-March quarter.
Nine month consolidated profit stood at 94.86 billion rupees, on net sales of 1.2 trillion.
Tata Steel it took a restructuring and impairment charge of $805 million in the year for its Europe operations.
It said profits would have been lower by 54.97 billion rupees had it charged changes in its actuarial valuations on its European employee pension plan to the profit and loss account instead of the reserves and surplus account.
Tata Steel, which last month won approval from banks to ease conditions on 3.7 billion pounds of loan it took to buy Corus, said it had strong liquidity and no material repayment obligations or refinancing for the next 12 months.
It said it had cash and equivalents of $2.1 billion on June 20 and an undrawn bank facility of $1.3 billion.
Shares in Tata Steel ended down 2.1 percent at 397.95 rupees, ahead of the results, in a Mumbai market .BSESN that fell 0.5 percent.
The shares are up 85 percent so far in 2009 after tumbling 77 percent in 2008. ($1=48.6 rupees) (Writing by Narayanan Somasundaram; Editing by John Mair)