By Dipali Banka & Apoorva Ajith | November 11, 2024
Tata Steel Ltd European operations continued to decline as steel consumption slumps on global tensions.
The steelmaker’s consolidated revenue has declined post the Covid-19 pandemic, with the 2025 estimates at Rs 22.16 lakh crore, signalling further contraction, according to data compiled by Bloomberg. Consolidated revenue was at a five-year high of Rs 24.23 lakh crore in 2022.
Tata Steel revenue trends over the last five years: consolidated vs. standalone
European operations contributed 34.9% to company’s overall Tata Steel’s revenue in FY24, according to data compiled by Bloomberg.
“Tata Steel’s European operations continue to remain a drag,” said Siddharth Gadekar, analyst at Equirus Securities. The lagging performance is a result of an ongoing declining demand in the European steel market, said Gadekar.
Tata Steel declined to comment on their European operations.
European Union (EU) steel demand projection for 2024 was revised to decrease by 1.8% from an earlier upward projection, according to an October 2024 report by Eurofer, the European Steel Association. The downward trend in demand has negatively impacted manufacturing and steel-using sectors such as construction.
Europe as a region is very “uncompetitive” in the global market, said Gadekar.
The slump in steel consumption is a result of the Russia-Ukraine war, economic instability in Europe and the deteriorating manufacturing outlook across the EU, said the report.
This has put India’s second largest steelmaker’s performance under pressure as it has already shut two legacy plants in Port Talbot in the UK this year. The company has secured an aid of $644.44 million dollars (£500 million) from the UK government to build an electric arc furnace in a shift to green energy.
Poor performance also pushed the company to take aid from the Dutch government. The investments in the Netherlands will depend on the Dutch government’s support, just as it did for the UK, said TV Narendran, chief executive officer at Tata Steel in their second-quarter earnings call.
The company is expecting the level of losses to come down over the next three quarters, said Koushik Chatterjee, executive director and chief financial officer at Tata Steel in their earnings call. “Our target is to ensure that we are neutral as far as EBITDA is concerned and cashflow neutral by June 2025.”