TATA Steel makes a loss in first quarter after sale of Scunthorpe plant

TATA Steel reported a loss in the first quarter due to the costs involved in the sale of its Scunthorpe operations.

The Indian steel producer made a loss of 32.9bn rupees (£370m) in the sale of its Lincolnshire based European long products division to Greybull Capital in April.

For the three months to 30 June 2016 the company made a net loss of 31.8bn rupees (£358m), compared to analysts' expectations for a profit of around 1.9bn rupees.

The overall loss was however 1.4bn rupees lower than the reported loss for the previous quarter.

According to group executive director Koushik Chatterjee the company's recent restructuring and cost-cutting in the UK as well as the depreciation of the pound had helped the company to improve its performance for the quarter.

Management however feel that Brexit could affect economic growth in the UK. "The weaker pound is expected to improve UK's short-term competitive position on exports, however it will add cost pressure due to higher cost of raw materials purchased in US dollars."

Tata still owns the Port Talbot steel works in Wales, which employs more than 4,000 workers, and some 2,000 more at other plants in Hartlepool, Rotherham and Stocksbridge.

The company blamed poor global results on plants which are no longer in operation including the Port Talbot plant in Wales.

In March the company said it would sell some or all of its remaining UK business putting 11,000 jobs at risk. The firm reconsidered after the government pledged millions of pounds in financial support.

One of the biggest obstacles standing in the way of these sales is the British steel pension fund that the company inherited when it bought the business in 2007. The fund has 130,000 members and a deficit of £700m.

The company said talks on the pension deficit were ongoing with all relevant parties including the UK Government, trustees and unions.

The company has been in talks for months to secure a rescue deal which is believed to involve the merging of Tata’s European operations with those of German steel group ThyssenKrupp, according to Sky News.

The share price fell 5.74% to 371.95p at the close.