Jul 25, 2012
Mittal warns of more losses in Q3 on weak market conditionsBack
Africa|ArcelorMittal South Africa|CoAL|Africa|Newcastle Mill|Electricity Costs|Lower Steel Prices|Steel|Steel Demand|Steel Producer|Iron Ore|Nonkululeko Nyembezi-Heita
© Reuse this
The group, led by Nonkululeko Nyembezi-Heita, revealed that domestic steel demand had been weaker than anticipated during the second quarter, when the group slumped to a headline loss of R177-million, and warned that the outlook for the third quarter was equally bleak.
“Due to a further deterioration in market conditions, third-quarter financial results are expected to extend the headline loss incurred in the second quarter on the back of lower steel prices and a further decline in domestic demand, partly offset by improved commercial coke sales,” the company said in a statement to shareholders.
Mittal reported improved operational stability during the period and “no major incidents”. But sales were lower, and higher domestic prices were not sufficient to offset higher input costs.
Revenue climbed 7% to R17.8-billion, on the higher prices for the period. However, the cash cost of producing hot-rolled coil increased by 11%, while the costs associated with producing billets rose 13%.
Underlying the cost increases was a 20% rise in the price of iron-ore, a 19% increase in electricity costs, a rise of 12% in local coking coal prices and a 2% increase for imported hard coking coal. The result was a 72% year-on-year fall in operating profit to R260-million.
Liquid steel production was 11% lower, at 349 000 t, on the comparable period in 2011, but 15% better than the previous six months, which had been afflicted by significant production losses primarily as a result of the dust catcher failure at the Newcastle mill.
"Mitigating the expected loss is a potential insurance pay-out resulting from claims currently in the process of finalisation. Movements in the exchange rate will also have an important impact," the company said.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...