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RESULTS: Arcelor Mittal
ArcelorMittal FY dil h’line loss 104c/share (4)
- ArcelorMittal FY loss R478m vs R9.38bn profit
- ArcelorMittal production down 8% to 5.3m tonnes
Johannesburg, Feb 10 (I-Net Bridge) - ArcelorMittal South Africa (ACL), the South African arm of the world’s largest steel producer, on Wednesday reported a reversal of earnings by posting diluted headline earnings per share of 104 cents for the year to end December 2009 compared to diluted headline earnings per share of 2,120 cents a share the year before.
The company’s 478 million rand loss for the year is a sharp contrast from the 9.38 billion rand profit posted for 2008.
Profit from operations shrank to 229 million rand in 2009 from 12.16 billion rand the previous year.
“This sharp decline in the financial performance was due to the severe impact of the global economic downturn on the domestic steel industry, which was further aggravated by the strength of the Rand,” the company said in a statement accompanying its results.
Revenue declined by 36% to 26 billion rand in 2009 from 39.9 billion rand in 2008 following a sharp decline in steel prices, while operating profit fell from 12.2 billion rand in 2008 to 229 million rand last year.
Production of liquid steel was cut back by 8% to 5.3 million tonnes last year as the company reduced output to match lower demand levels.
The cutbacks in 2009 were mostly in the flat products business where capacity utilisation levels averaged 60%.
Among long steel products, capacity utilisation was just over 80% amid strong demand in the export market.
With the restart of Blast Furnace C at Vanderbijlpark Works in the fourth quarter, company wide capacity utilisation rose to 78%.
Sales volumes for the year decreased by 12% compared to 2008 as domestic sales dropped by 30% to 3.2 million tonnes.
This was partially offset by a 95% rise in export sales to 1.4 million tonnes, particularly to markets in East and West Africa.
But average net export prices were still significantly lower at 48% less than in 2009.
ArcelorMittal South Africa CEO Nonkululeko Nyembezi-Heita said 2009 was undoubtedly one of the toughest years experienced by the company and its “disappointing” financial results for the year reflect the poor trading conditions.
But she said the company was encouraged by the gradual improvement in its business during the second half of the year.
“While the recession and the strength of the Rand/US dollar exchange rate severely impacted the domestic steel industry, having taken measures to ensure a reduced cost base enabled us to respond quickly to the rebound in quarter four,” Nyembezi-Heita said.
Looking ahead, the company expects its performance to continue improving during 2010 on the back of the forecast economic recovery, continued re-stocking among merchants and steadily improving demand for steel.
“We anticipate a gradual recovery this year in line with an upturn in many of the markets we service. While domestic steel prices remain subdued, we are cautiously optimistic that global demand will continue to show steady improvement during the year,” said Nyembezi-Heita.
A further rise in headline earnings on the fourth quarter’s 469 million rand profit is forecast, with the extent of the increase depending on a number of variables, notably the rand-US dollar exchange rate.
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