Tata Steel’s UK Operations Likely to Turn Profitable in Second Half of FY25, CEO Narendran Forecasts

Tata Steel’s CEO, T V Narendran, predicts that the company’s struggling UK operations will likely start making a profit in the second half of the fiscal year 2025. Despite this improvement, the UK operations are still projected to end FY25 with an operating loss, although narrower than the previous year.

In an interview with Nikita Periwal, Narendran highlighted that steel demand in Europe has been weak, with consumption levels still below those seen in 2008. However, he anticipates that demand will stabilize, and the European steel market will undergo restructuring due to higher carbon border taxes.

Progress in Netherlands Transition

Narendran also mentioned progress on discussions in the Netherlands, where Tata Steel expects to reach an agreement within 3-6 months. The company plans to transition 7 million tonnes of capacity in the Netherlands over the next decade, primarily to adapt to upcoming carbon taxes.

Despite these transitions, Tata Steel aims to maintain its capacity in Europe, having already restructured capacity when acquiring Corus. Narendran believes that Tata Steel will remain competitive in the UK, even with the introduction of electric arc furnaces in 2027, due to improved cost positions.

Regarding the financial aspect, Narendran expressed confidence in Tata Steel’s balance sheet to support these transitions. He expects the company’s net debt to EBITDA ratio to improve and foresees cash flows improving due to positive developments in the Netherlands, increased volumes in India, and the UK operations turning EBITDA positive in the second half of the year.