MUMBAI: Tata Steel, the world’s sixth-largest steel maker, on Thursday posted worse-than-expected consolidated second-quarter losses due to weak steel prices and lower production at its UK unit, Corus Group.

Mumbai-based Tata Steel said its consolidated net loss in the July-September period totalled Rs 2,710 crore, compared to a net profit of Rs 4,770 crore last year. Revenue in the same period fell 43% to Rs 25,270 crore.

The company said it expected profits to improve in the second part of the year. “In the second half, we’ll see a trend reversal in profit,” said CFO Koushik Chatterjee. Tata Steel, which had a net debt of $9.8 billion on September 30, plans to prepay $180 million by March next year, he added. Prices of global steel prices fell 40% on an average in the three months ended September 30 compared to last year.

Last month, the World Steel Association said steel demand would fall 8.6% this year, though this is much lower than the 15% it predicted in April. Corus, which accounts for more than 60% of Tata Steel’s output, cut production last year after the financial crisis tightened liquidity and eroded demand due to slower consumption from cars and construction companies.

Shares of Tata Steel fell 3.5% to Rs 543.70 at the close of trading in Mumbai. In comparison, the Sensex fell 2%. “The market was expecting some improvement in the consolidated performance due to a rise in the capacity utilisation and also due to cost-saving initiatives,” said analyst Niraj Shah of Centrum Broking. “The situation hasn’t improved much and problems might persist as the outlook on steel is not yet positive,” he added.

Tata Steel is paring costs by rationalising operations in Europe and restructuring interest payments. The company took one-off charges, related to the restructuring in Europe, amounting to Rs 910 crore in the second quarter.

Corus, which has an annual production capacity of 20 million tonne, has plants in the UK, the Netherlands, Germany, France and Belgium. Capacity utilisation at the plants was 75% in Q2, Corus CEO Kirby Adams said. Tata Steel acquired Corus for about $13 billion in 2007, in a bid to access European and American markets. However, less than a year later, the liquidity meltdown and resulting slowdown led to an erosion of the market in the US and UK.

Earlier in November, Tata Steel issued $546.9 million in new convertible bonds in exchange for bonds worth $493 million as part of a plan to reduce costs and ease repayment obligations.

The new foreign currency convertible bonds will have a yield-to-maturity of 4.5% and will mature in November 2014. The previous bonds had a yield-to-maturity of 5.15% and were due to mature in 2012.

The new bonds are convertible into shares at Rs 605.53 each, while the previous ones were convertible at Rs 733 apiece.