Steel Giant Tata takes £862m hit from UK
6 November 2015
Tata Steel has taken an £862m hit from its beleaguered UK operations blaming a "rapid and sharp deterioration in the underlying business environment".
The announcement in latest quarterly results from the Indian-owned giant comes weeks after it confirmed it was cutting nearly 1,200 jobs, in Scunthorpe and Lanarkshire.
It said Tata Steel Europe saw steel production and deliveries fall for the second quarter to the end of September, with weakness in the UK helping it sink to an underlying loss of 238 crores (with a crore representing 10 million rupees), or £23.7m.
Tata said: "Market conditions in Europe, primarily in the UK, significantly worsened."
It said that in the UK it was facing weak domestic manufacturing demand as well as surging imports and a strong pound which makes British products dearer for foreign customers.
It was also facing "steep regulatory and business costs".
Tata is one of a number of companies that have been slashing jobs in the steel industry recently.
The cuts have been blamed on high energy costs and a flood of cheap imports from China.
It said it had written down the value of the UK business and the impact of this together with restructuring charges and other provisions added up to 8,669 crores (£862m).
Dr Karl-Ulrich Kohler, boss of Tata Steel in Europe, said: "Our operating result has turned negative this year, reflecting the huge challenges the global steel industry is facing.
"In the UK these issues have been compounded by unhelpful exchange rates and regulatory costs that are destroying competitiveness.
"We have made three restructuring announcements in the UK since July leading to reduced volume and costs.
"We are working with the UK government to urgently secure a more competitive trade and regulatory environment and we will support our employees affected by restructuring."
The wider steel company, which is part of a bigger hotels-to-cars conglomerate, saw pre-tax profits fall 27% to 1,785 crores (£178m).
Tata Steel is Europe’s second-largest steel producer.It also operates in India and southeast Asia.The company employs 17,000 people in the UK.