Having a customer-focused strategy based on the development of differentiated steel products has enabled Tata Steel Europe to stabilise its market position, according to chief executive officer Karl Koehler.
While market conditions have worsened, claimed Koehler, Tata Steel Europe has developed a comprehensive portfolio of advanced steel products and is now shifting its focus towards optimising sales and developing ‘next-generation’ steels.
An increase in liquid steel production by more than 7% year-on-year in Q1 FY 16 is claimed to reflect a more stable operating platform for the company, but surging EU imports, especially from China, and, in the case of the UK operations, the appreciation of sterling against the euro, led to lower turnover, according to Tata Europe.
The company describes the automotive industry as a key bright spot, accounting for more than a quarter of Tata Europe’s new product portfolio. New automotive products sales have more than doubled over the past year.
Tata Steel Europe’s long products division faces ‘severe challenges’ due to poor market conditions and has been hived off into a separate wholly owned subsidiary, enabling the company to evaluate alternative strategic options.
Recent initiatives with a strong cost improvement element include the recently proposed restructuring of the Speciality & Bar business and the transformation programme of Strip Products UK. “These moves will also better enable the businesses to increase focus on their added value product and service portfolios away from higher volume, commodity production,” the company claimed.
Group turnover for Tata Europe was £1.84 billion, down 11.1% on Q4 FY 15’s £2.07 billion and down 10.7% on Q1 FY 15’s £2.06 billion in sterling.
Liquid steel production for Q1 FY 16 was up 1.3% at 3.96Mt when compared to Q4 FY 15’s 3.91Mt and up 7% on Q1 FY 15’s 3.70Mt.
Deliveries for Q1 FY 16 were 3.44Mt, down 9.7% on Q4 FY 15’s 3.81Mt, but up 7.4% on Q1 FY 15’s 3.20Mt.
“Surging imports constitute a threat to European steelmaking. Uncompetitive energy costs and the strength of sterling are hurting our UK operations. These three factors caused our first quarter financial performance to deteriorate, despite our more stable production platform as seen in our improved operating performance,” Koehler said.