Tata Steel Ltd. said Monday the company will record a $1.6 billion impairment charge in its financial results for the last fiscal year ended on March 31 because of weak economic conditions in the European market.
Tata Steel said also it has cut cash-flow estimates from its European business as it expects the market in Europe to remain weak over the near and medium terms.
The company, part of India’s salt-to-automobiles Tata Group, entered Europe in 2007 by acquiring Corus, one of Europe’s biggest steel producers.
It has been struggling to turn around the European unit’s operations for the past couple of years, cutting staff and selling a plant in the U.K. The unit’s performance has been a major drag on Tata Steel’s results.
Steel demand in Europe has fallen by almost 8% in 2012-13 from a year earlier and almost 30% since the emergence of the global financial crisis, the company said in a regulatory filing.
Because of the weak market condition, the company will take a non-cash write-down of its goodwill and assets, it said in a regulatory filing. The charge will also include write-downs related to Tata Steel’s ferro-chrome business in South Africa and a mini blast furnace in Thailand.
The company is scheduled to report its results for the January-March quarter and the last fiscal year on May 23.