Tata Steel bounces back from loss Tata Steel, India's largest private sector steelmaker by sales, posted better than expected net profits in the second quarter, as both its struggling European and more resilient domestic Indian divisions boosted production. The Mumbai-based company reported net profits of Rs9.2bn ($144m) in the second quarter, bouncing back from a loss of $58m in the same period last year, amid hopes that demand in Europe's battered steel market might finally begin to improve next year. Tata's European steel operation, the legacy of its $13.1bn purchase of Corus in 2008, has suffered large losses during the past two years, as steel demand shrank in the aftermath of the eurozone debt crisis. This year Tata Steel also announced a $1.6bn write down, almost entirely related to its facilities in the UK and continental Europe, leading some analysts to speculate that the group's Indian parent conglomerate would consider selling assets in the region to stem losses. But Tata Steel's European chief executive Karl Köhler hailed the company's more recent performance as "the best like-for-like quarter for five years," as production volumes increased to nearly 4m tonnes, up 16 per cent year-on-year, after heavy capital expenditure to refit ageing facilities. Tata Steel does not publish quarterly profits at its lossmaking European division, but it reported earnings before interest, taxes, depreciation and amortisation, an underlying measure of profitability followed by analysts, of Rs5.5bn ($87m), compared to an ebitda loss of $6m for the same period last year. "We clearly see signs of improvements in the European market, although on a very modest level," Mr Köhler said at a press conference in Mumbai. We must be cautious because the whole steel world has huge overcapacity, and that means there is a natural buffer against rising prices . . . but the mood is coming back, I would say. Tata Steel's European operations account for two-thirds of production and slightly more than half of revenues, which increased to Rs366bn ($5.8bn) in the quarter, up 7 per cent year-on-year. "Europe has suffered from two consecutive years of falling steel demand which hit Tata Steel along with other producers," said Abhay Laijawala, a metals and mining analyst at Deutsche Bank in Mumbai But expectations are growing that 2014 will see a return to growth, and with inventories in the system on the lower side, restocking in anticipation of a recovery may be a catalyst for demand. The company's smaller but more profitable Indian division, which has also faced difficult conditions against the backdrop of a slowdown by Asia's third-largest economy, reported net profits up 15 per cent year-on-year to Rs15.6bn ($246m) year-on-year Koushik Chatterjee, group executive director at the company, also confirmed Tata was unlikely to bid for Indian steel and iron assets being sold by Stemcor, the private British steel trading group. He said the company did not have a "serious interest" in the acquisition.