Member Article

Tata Steel up 6% despite dramatic European weakness

Steelmaker giant Tata Steel rallied a 6% rise in its share price on Friday morning despite posting a net loss in the fourth quarter 2012 the previous day.

The company, which keeps its UK bases in Port Talbot, South Wales, Rotherham, Yorkshire and Scunthorpe, Lincolnshire, said “severely depressed conditions” in Europe resulted in a loss of 65.29bn rupees (£776m).

These figures were released following a 500-man job shed from its Port Talbot operations last year and a £1.1bn writedown of its assets in Europe last week.

Tata Steel said it is continuing to invest in UK apprentices with training and development, while £1bn has reportedly been invested over the last three years to improve “structural competitiveness of the business”.

The firm added that a £220m blast furnace had recently been rebuilt at its Port Talbot site, which it called the “largest industrial engineering project in the UK in the recent past.”

Managing director for Europe and chief executive of the firm, Karl-Ulrich Köhler, commented: “Europe’s economic deterioration last year reversed the modest recovery in European steel demand that had been going on since 2009 and our deliveries fell as a consequence.

“We acted decisively in response to the renewed downturn by focusing intensely on costs and cash flow management. We took £200 million of fixed cost out of the business and reduced our steel stocks to record lows by year-end.

“We also acted to restructure our support functions and asset base. But we did not allow the downturn to divert us from our longer-term objective of building an all-weather business.

“We invested significantly in improvements to our operational base and we made substantial progress in strengthening our long-term relationships with end customers in our chosen sectors.

“And we increased the proportion of high-value, differentiated products and services in our sales, which have risen by almost 20% in the last two years.

“These improvements have given us a firmer foundation as we enter another tough year of subdued steel demand in Europe.”

This was posted in Bdaily's Members' News section by Miranda Dobson .