ArcelorMittal SA narrows its loss
ArcelorMittal SA, the country’s largest steel maker, says that its loss per share in the year to December 2016 is expected to fall by up to 80%. This should provide a small dose of relief for long-suffering shareholders, after the country’s largest steel maker recorded a record loss of R8.6bn in financial 2015.
ArcelorMittal SA, the country’s largest steel maker, says that its loss per share in the year to December 2016 is expected to fall by up to 80%.
This should provide a small dose of relief for long-suffering shareholders after the country’s largest steel maker recorded a record loss of R8.6bn in financial 2015. The group produces about 80% of SA’s steel.
The company, which is in a closed period, says more information will be given during its annual results presentation in Johannesburg on Friday. It says the loss in 2016 is expected to fall from R21.52c a share to a loss within a range of R4.38c and R4.48c per share. Higher steel prices and cost improvements have helped bolster the results.
“The headline loss per share is … expected to decrease from 1,338c to a headline loss per share within a range of 239c and 249c a share,” the group said on Monday. This was an 82% and 81% change, respectively.
The improvement was primarily due to nonrecurrence of one-off items in 2015 totalling R2.56bn, the company said. These included a R1.5bn Competition Commission penalty; costs relating to the closure of the Thabazimbi iron-ore mine and the impairment of R4.2bn, mainly at its Saldanha plant and for the Vaal Meltshop closure in Vereeniging.
The South African steel industry directly accounts for about 1.5% of GDP.
ArcelorMittal SA CEO Wim de Klerk said earlier that the company’s export-oriented Saldanha plant had been built on the concept of cheap Eskom power. But with no respite from electricity costs, the survival of the plant had been under threat.
De Klerk had also said that if ArcelorMittal SA did not get safeguard protection from the government — in addition to 10% basic tariff protection — against mainly Chinese imported steel, the domestic industry was likely to collapse.
The subsidiary of the Indianbacked global ArcelorMittal group had recently struck a long-delayed black economic empowerment transaction. The R2.3bn “walkaway” deal is for 25.1% of the domestic company.
It had also promised government it would regulate its prices for five years, while investing R4.6bn in operating efficiencies.
The Treasury has just designated fabricated structural steel with 100% local content for procurement by state entities. This could help kick-start large-scale infrastructure projects in SA. But many uncertainties remain.