Tata Steel intends to finish its UK operations reorganization over the next nine months, which may help the business reduce years of losses, according to Managing Director and Chief Executive Officer TV Narendran. The rebound in the Netherlands may occur sooner.
“For a variety of factors, the Netherlands’ financial performance in recent quarters has been poor. But the blast furnace relining is now complete. The blast furnace should resume manufacturing next week. And, over the following several quarters, we’ll return to the output levels that we expect from the Netherlands,” Narendran added.
The revenue from Europe operations declined 12.5% to Rs 18,141.97 crore in the third quarter.
The steel company purchased Corus, Europe’s second-largest steelmaker, in 2006, but the merger quickly proved to be an Achilles heel during the 2008 financial crisis, pulling down the Indian parent. With the restructuring measures, the steel giant expects its gamble on Corus to ultimately pay off.
Last year, the business announced the layoff of 800 employees at its underperforming unit in the Netherlands. On January 19, the business announced that it would be closing down the two blast furnaces at its Port Talbot Steelworks in Wales, UK, in stages, affecting up to 2,800 employees altogether.
“You will see the UK undergo upheaval over the next nine months or so. Only then will you see an increase in operational performance in the UK,” Narendran said.
Narendran told Reuters that the anticipated job losses in Britain were the “least bad option.”
Tata Steel has pledged more than £130 million to a comprehensive assistance package for impacted employees at its Port Talbot operation in the United Kingdom. This is in addition to the company’s £100 million support for the Transition Board, which it established in collaboration with the UK and Welsh governments.
According to Narendran, reducing energy prices will benefit Netherlands operations as well. “Gas and electricity rates have plummeted, lowering energy costs. So expect the Netherlands to be back in positive territory next year,” Narendran added.
Production and deliveries were reduced year on year owing to the relining of one of the blast furnaces in the company’s Netherlands facility.
“In the Netherlands, we’ve historically been EBITDA-positive and cash-positive, but we’ve had four or five terrible quarters for two reasons. One, we had a cold rolling mill improvement that we conducted at the close of the previous fiscal year, which took longer than projected to scale up; this impacted the product mix.“
