India's Tata Steel posts 87% profit plunge, misses estimates as prices drop

BENGALURU (Reuters) - India's Tata Steel on Monday missed analysts' quarterly earnings estimates by a wide margin as profit slumped more than 87% due to a drop in steel prices amid a global economic slowdown.

Concerns over slowdown in key economies, geopolitical issues and seasonal factors have led to a "volatile operating environment", Chief Executive Officer T.V. Narendran said.

Tata Steel, established in 1907, reported a consolidated net profit of 15.14 billion Indian rupees ($182.87 million) for the three months to Sept. 30, compared with analysts' average estimate of 27.32 billion rupees, according to Refinitiv IBES data.

"Utilisation of high-cost inventory of raw material and steel coincided with drop in realisations to result in margin decline across geographies," Chief Financial Officer Koushik Chatterjee said.

Tata Steel has an annual crude steel capacity of 34 million tonnes per annum and last month approved combining six of its subsidiaries with the parent company to improve operational efficiency, optimise raw material utilisation and cut costs.

The company, which has steelmaking facilities in the Netherlands and the United Kingdom besides India, said deliveries were lower from the previous quarter in Europe, in part due to seasonal factors and subdued demand in the region.

Second-quarter total revenue from operations fell to 598.78 billion rupees from 603.87 billion rupees last year.

Rival JSW Steel posted a surprise quarterly loss earlier this month as the metal's prices slumped, and said that imposition of export duty on finished steel products in May had made overseas shipments unattractive.

The environment should gradually improve in the second half of fiscal 2023 due to government measures and restocking, with margins benefiting across geographies from a recovery in Indian markets and a favourable movement in raw material prices, especially coking coal, Chatterjee added.

($1 = 82.7930 Indian rupees)

(Reporting by Nallur Sethuraman and Anuran Sadhu in Bengaluru; Editing by Vinay Dwivedi)