Tata Steel warns on rise in costs

City A.M. Reporter
INDIA’S Tata Steel yesterday warned rising raw material costs could hurt margins for a couple of quarters after posting its highest-ever annual net profit, bolstered by a surge in prices and demand in Asia’s third-largest economy.

The world’s seventh largest steelmaker, whose European operations account for two-thirds of its global capacity of about 28m tonnes, said tepid demand in Europe was a cause for concern although it was seeing some positive turnaround signs.

“The outlook for 2011 is positive on the back of faster recovery in Europe and strong growth in emerging markets,” said Tata Steel’s finance chief Koushik Chatterjee.

“But the environment remains challenging because of higher raw material prices,” he said.

Tata Steel said its consolidated net profit after taxes, minority interest and share of profit of associates jumped about 72 per cent to 41.78bn rupees (£573m) in its fiscal fourth-quarter, up from 24.34bn a year earlier. Net sales for the year rose nearly 15 per cent to 1.17 trillion rupees.

Last week, the company said it will cut about 1,500 jobs in Britain as part of a restructuring of its loss-making long products unit, and cut capacity at a plant in northern England.