Fitch Revises Tata Steel's Outlook Amid UK Operational Uncertainty

Fitch Ratings revised its outlook on Tata Steel to negative due to uncertainties in its UK operations. While strong growth in India and Dutch EBITDA profits might mitigate UK losses, the rating remains at 'BBB-'. The UK government's involvement in job preservation and joint decarbonisation efforts are key factors.

Fitch Ratings on Friday revised its outlook on domestic steel major Tata Steel to negative, citing uncertainty in the turnaround of the company's operations in the UK.

Expected robust growth in Tata Steel's India operations and likely EBITDA profits at the Dutch operations in FY25 could offset potential losses in the UK, according to Fitch.

Fitch affirmed the Issuer Default Rating (IDR) for Tata Steel Limited (TSL) at 'BBB-', but noted that the negative outlook reflects concerns about the UK operations turnaround.

The USD 1 billion notes due July 2024 issued by TSL's subsidiary ABJA Investment Co. Pte. Ltd. also received a 'BBB-' rating, highlighting the uncertainty in TSL's UK plans.

The UK government's change and actions by labor unions to save jobs may delay Tata Steel's loss reduction plans through FY25.

Tata Steel owns a 3 MTPA Port Talbot plant in South Wales and employs around 8,000 people in the UK. The company is transitioning to a low-emission electric arc furnace process as part of its decarbonisation strategy.

In September 2023, Tata Steel and the UK government agreed on a joint £1.25 billion investment for decarbonisation at the Port Talbot facility, with £500 million provided by the UK government.