MUMBAI-Tata Steel Ltd. 500470.BY +3.32% Wednesday swung to a consolidated net profit for the fiscal second quarter from a year-earlier loss, aided by ongoing restructuring at its European unit and higher income in India.
The company posted a net profit of 9.17 billion rupees ($145 million) for the three months ended Sept. 30, compared with a loss of 3.64 billion rupees a year earlier.
The company, part of India's salt-to-software Tata Group, said its sales rose 7.4% to 366.45 billion rupees.
Tata Steel gets more than half its revenue from Europe. But a drop in steel demand there and high costs had made the unit a drag on the company's overall performance.
Tata Steel entered Europe in 2007 by acquiring Corus, one of Europe's biggest steel producers at that time. It had been trying to turn around the European unit's operations by cutting cost. Last month, the unit said it was restructuring its U.K. long-steel-products division and may cut about 500 jobs.
"It seems they [restructuring steps] have started bearing fruit," said Bhavesh Chauhan, a senior research analyst at Angel Broking.
In Europe, production rose 16% in the past quarter to 3.86 million metric tons, the company said. Revenue increased to 211.49 billion rupees from 203.14 billion rupees.
In India, Tata Steel said, its revenue rose 8.4% to 99.21 billion rupees in the past quarter.
The company expects steel consumption in India to be better in the second half of the fiscal year ending March 31 compared with the first half, said T.V. Narendran, managing director of its India and Southeast Asia operations.
Tata Steel is ramping up production in India.
The company is building a new plant in the eastern state of Orissa with an annual capacity of 6.0 million tons. The plant is expected to start operations in the second half of the fiscal year starting in April 2014.