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Materials stocks will be doing it tough. More bad news from offshore…

Materials stocks will be doing it tough. More bad news from offshore…

At its Annual General Meeting held in Mumbai yesterday, the Chairman of Tata Steel, Ratan Tata, reported an 89% plunge in its June Quarter 2012 net profit.  <http://economictimes.indiatimes.com/tata-steel-ltd/stocks/companyid-12902.cms>

Mr Tata said the Company will need to restructure its operations due to a slackening of global steel demand.  From their 2006 acquisition of Corus, around half of Tata Steel’s 24 million tonnes per annum capacity is European based.

Meanwhile, Hong Kong listed China Resource Cement has released a disappointing interim report to June 2012.  Accordingly, their net profit forecast for each of 2012, 2013 and 2014 has been cut aggressively.  Despite building capacity by 25% to 64 million tonnes of cement per annum, the gross profit margin per tonne for 2012 is expected to be less than half that recorded in 2011.  China Resource Cement’s net profit should be around HK$1.4 billion in 2012, down 67% from HK$4.2 billion in 2011.


Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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  1. zoran arnautovic

    All this “doom and gloom”.All you need is german accent and Faber will be in our living rooms.
    I hope you are wrong and next year you dont say: “I told you so”.
    Thanks for timely warning anyway.

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