Financial performance

The financial performance pillar of the SCALE transformation programme is designed to enhance resilience, improve profitability and increase free cash flow generation, thereby supporting TSN’s long-term sustainability and establishing a robust foundation for the substantial capital expenditure required for the transition in the coming years. Strong financial performance is also more important than ever, given that the European steel industry continues to face unprecedented challenges, including volatile market demand, lower steel prices, rising input costs for key raw materials such as iron ore and coal, stringent environmental regulations, and intensifying global competition. Through a structured financial performance transformation programme, TSN is positioning itself to navigate these headwinds and to strengthen its competitive standing within the rapidly evolving European steel landscape.

We must be financially strong and perform solidly throughout the cycle and in all critical areas of our business, continuously improving efficiency and delivering results. This means we must take a hands-on approach to tackle our most important challenges. TSN is at a structural turning point. The company’s strategy is anchored in the SCALE transformation programme, which is built around the core objectives improving gross margin, reducing controllable costs and driving focused initiatives related to improvement and release of working capital, leading to additional cash flow generations.

Initiatives to improve gross margin span the end‑to‑end value chain, including supply chain optimisation, procurement, pricing and sales discipline, operational excellence at the shop floor, and productivity improvements. In parallel, cost actions focus on structurally reducing maintenance, labour and other controllable costs,

The programme consists of nine workstreams. Each workstream consists of multiple impact centres comprising of various project improvement teams which are spread throughout the whole organisation. The Transformation Project Management Office (TMO) plays a central role in integrating the programme across all value chains, focusing on rigorous measure detailing and progress tracking across all workstreams. It is responsible for comprehensive financial due dilligence, reporting and effective change communication, supporting transparency and alignment throughout the organisation. The TMO also oversees programme governance and maintains data transparency, enabling informed decision-making and consistent execution of improvement initiatives.

This structured approach makes sure that all critical areas are addressed, driving sustainable performance improvements across the organisation.

What we achieved so far

During the year, TSN made tangible progress in operational improvements, supply chain efficiencies, organisational restructuring and preparation for the next phase of transformation. The company continued to reinforce its competitive positioning through portfolio optimisation, product market focus and operational efficiency initiatives. As part of the SCALE programme and organisational transformation, TSN recognised restructuring costs, including provisions related to the agreed Social Plan. These measures are aimed at transitioning towards a leaner, functionally led operating model and strengthening long term competitiveness.

Progress to date has been encouraging. In Sales & Supply Chain, higher prime deliveries were achieved in the automotive and engineering segments, supported by improved price premiums across major markets. Further value was created through product innovations and logistics optimisation, enhancing efficiency and reducing structural costs.

In procurement, value initiatives were implemented through the deployment of a range of procurement levers, delivering positive results across identified focus areas.

Operational performance improvements focused on enhancing throughput rates, increasing speed of work, optimising process yields, improving raw‑material mix and blend optimisation and reducing fuel rates. In parallel, steps were taken to reduce maintenance expenditure through the introduction of improved maintenance strategies, including optimisation of corrective and preventive maintenance practices.

Further progress was made in driving cost efficiencies through targeted reductions across multiple operational overhead categories. In addition, organisational restructuring was initiated, intended to enhance employee productivity and support sustainable performance improvements. 

Financial results

In our financial year 2025/26, the European steel industry continued to operate in a challenging market environment, marked by a weak economic outlook, elevated energy costs, growing geopolitical tensions and rising expenses linked to climate-related requirements, all of which placed significant pressure on TSN and the broader European steel industry's long-term competitiveness. 

Early in the business year, sentiment in the European strip steel market briefly improved due to supply-driven stimuli, supported by tighter EU safeguard measures, provisional antidumping duties and a major funding package approved in Germany. This temporary uplift was soon offset by the US decision to double tariffs on steel, which weighed heavily on EU steel exports and redirected additional volumes into the European market, intensifying price competition across the sector. 

Towards the start of the fourth quarter of the business year, sales prices started to increase in our favour following higher priced import offers mainly because of the EU Carbon Border Adjustment Mechanism (CBAM), which came into effect on 1 January 2026.

Notwithstanding such challenging market environment, the benefits of the SCALE transformation programme are increasingly evident in the improved financial performance, with underlying EBITDA (excluding penalties and specific regulatory costs) rising from €93 million (1.5% of revenue) in FY25 to €268 million (4.4% of revenue) in FY26.

Within this market environment, TSN’s financial performance was as follows:

Revenue

Revenue for the 2025/26 financial year amounted to €6,028 million, a decrease of 3.9% compared to the prior year. Driven by lower deliveries and prices. Deliveries in 2025/26 stood at 6.14 Mt, or 1.7% down on last year. Revenue per tonne declined by 2.3% year-on-year, reflecting persistent price pressure due to imports, weak industrial demand and overcapacity.

Following the increase in US steel import tariffs to 50% effective 4 June 2025 and the expiry of most remaining product‑specific tariff exclusions from November 2025 onwards, pressure on US export volumes and realised prices intensified in the second half of the financial year. TSN deliveries to North America declined by approximately 21% year‑on‑year. The impact on overall deliveries was partly mitigated through the redirection of shipments to alternative markets.

As a result, revenue from North America amounted to €953 million and was only 2% lower than in the prior year, reflecting substantial pass‑through of higher tariffs to customers.

Costs

The principal raw materials used in TSN’s carbon steelmaking operations are iron ore, metallurgical coal and steel scrap. In 2025, the market reference price for iron ore (China CFR 62%) was lower than in the prior year, reflecting weaker demand from China. Hard coking coal spot prices (Australia FOB) also declined, continuing their normalisation following the elevated levels seen in the second half of 2023 and the first half of 2024. Together with a weaker US dollar, these developments provided partial relief from the downward pressure on steel sales prices.

In addition, TSN delivered further benefits through SCALE initiatives. These included improved purchasing conditions for iron ore and coal, lower inbound logistics costs through shipping and freight optimisation, and improved performance in fuel rates, scrap usage and overall material yield.

Emission rights costs increased by €26 million to €179 million in 2025/26. The prior year benefitted from a surplus of free emission allowances related to the Blast Furnace 6 outage. Average EUA prices increased to approximately €75 per tonne compared with €67 per tonne in the prior year. This cost increase was partly mitigated by an improvement in the emission intensity of production, with emissions per tonne of liquid steel decreasing from 1.68kg/t to 1.63kg/t, driven by higher scrap utilisation.

As part of the SCALE transformation programme, Tata Steel Nederland approved a major organisational restructuring in December 2025, aimed at transitioning to a leaner, functionally led and centrally managed operating model. The restructuring involves organisation‑wide downsizing with a targeted reduction of approximately 1,200 FTEs. Implementation commenced in January 2026 through a staged placement process, with the new organisational structure becoming effective from 1 April 2026. 

Employment costs, excluding redundancy and related costs, amounted to €1,184 million an increase of 0.3% compared with the prior year, reflecting the full‑year cost base prior to the implementation of the new structure. The full impact of the planned headcount reduction is expected to be visible from the 2026/27 financial year onwards.

The restructuring is supported by a negotiated Social Plan, which provides for redeployment opportunities, job guarantee provisions for roles up to a defined level, and access to voluntary departure arrangements. These measures are designed to mitigate the impact on employees while enabling the implementation of the new operating model. As part of the implementation of the Social Plan, TSN recognised a restructuring provision of €94 million in the 2025/26 financial year, reflecting the expected cost of agreed voluntary and involuntary redundancies arising from programmes announced before the end of the reporting period.

EBITDA 

EBITDA for the 2025/26 financial year amounted to €268 million, or 4.4% of revenue, compared to €93 million, or 1.5% of revenue in the prior year. This improvement was achieved despite continued challenging market conditions and a significant negative impact from increased US tariffs, and reflects the combined impact of improved cost performance and ongoing operational optimisation initiatives.

Net result

The net result for the year amounted to a loss of €206 million (2024/25: €204 million loss). The change compared with the prior year was primarily driven by improved underlying operating performance, as reflected in higher EBITDA, and lower net finance costs, partly offset by redundancy and related costs of €98 million (2024/25: €5 million) and the absence of recognition of a tax credit on losses incurred in 2025/26.

Net cash flow from operating activities

TSN maintained a strong focus on liquidity and cash flow management. Net cash flow from operating activities remained at a favourable level in the 2025/26 financial year, amounting to €473 million (2024/25: €408 million). This performance was driven by an improvement in the underlying business and by focused, stringent working capital improvement measures alongside tight cash management. As a result, TSN continued the positive trend seen in the previous year, during which working capital had already been reduced by €289 million.

Net cash flow from investing activities

Capital expenditure

Capital expenditure on property, plant and equipment in 2025/26 amounted to €251 million (2024/25: €300 million) and comprised investment across several major capital projects throughout TSN. The principal projects undertaken during the year included investments at our IJmuiden site as part of our Roadmap Plus initiatives, particularly the Pellet Plant Dedusting and DeNOx projects, providing essential sustenance capital to maintain asset reliability, and business-driven upgrades to support operational performance, in particular the TCCT One Pass project, a dedicated new production line for high-quality packaging steel. In alignment with TSN's decarbonisation pathway, TSN invested capital in connection with the realisation of the future Direct Reduction Plant (DRP), the Electric Arc Furnace (EAF) and the Coverages projects to facilitate the Green Steel Project.

Investments and acquisitions

On 15 July 2025, Tata Steel Nederland B.V. entered into a share purchase agreement with Vattenfall Power Generation Netherlands B.V. for the acquisition of 100% of the shares in LAG Velsen B.V. (LAG), consolidating ownership of strategic power generation assets supporting energy integration and transition readiness. Completion of the transaction took place on 1 January 2026, at which date control was obtained. Prior to completion, Vattenfall carved out three power plants (i.e., Velsen 24, Velsen 25 and IJmond 01) together with a solar park and the land on which these assets are situated. These assets, along with the associated personnel, contracts and permits, were transferred to LAG before the shares were sold to TSIJ.

For TSN, these plants represent a strategic link in the transition towards more sustainable steel production. Direct ownership enables improved coordination between steelmaking activities and residual gas processing, supporting both the shift to low-carbon steel production and the creation of a healthier living environment around the IJmuiden site.

The total purchase consideration on an equity value basis amounts to €125 million, consisting of a cash consideration of €115 million paid at completion and a deferred payment of €10 million due 24 months after the transaction date.

Full details of TSN’s subsidiary companies are provided in Note 29 to the financial statements.

Financing

For financing its operations, TSN mainly relies on cash generated by operations, its multi-bank revolving credit facility (RCF) and a trade receivables financing arrangement. TSN has a multi-bank revolving credit facility (RCF) in place for a total amount of €550 million (March 2025: €550 million). As at 31 March 2026, the drawn amount equalled €110 million (March 2025: €310 million), following repayments of in total €200 million during the reporting period.

TSN continues to make use of the trade receivables securitisation program of €600 million, under which trade receivables are purchased on a non-recourse basis (see Note 12 to the financial statements).

In addition to the committed RCF and the securitisation program, TSN has access to multiple non-committed overdraft facilities, to a total amount of €115 million (March 2025: €68 million) to support efficient cash management operations. At reporting date, these facilities were undrawn.

Based on the current operating outlook and available committed facilities, TSN considers its liquidity position to be adequate to support the requirements of the existing business. However, the execution of the planned multi‑billion euro decarbonisation and transformation investments is expected to require financial support from Tata Steel Limited and governmental support mechanisms.

Balance sheet

TSN’s net assets on 31 March 2026 were €2,810 million (31 March 2025: €3,001 million). The decrease of €191 million compared with the prior year primarily reflects the loss for the financial year of €206 million, partly offset by positive other comprehensive income of €15 million.

Improved EBITDA and a strong focus on working capital and cash flow management have enabled TSN to reduce gross debt (including capital leases) from €491 million as at 31 March 2025 to €240 million as at 31 March 2026 while funding the LAG acquisition from its own means.

Net debt on 31 March 2026 amounted to €35 million positive (31 March 2025: €63 million negative). Cash and short-term deposits totalled €275 million (31 March 2025: €428 million). Further information on borrowings is provided in Note 15 to the financial statements.